Liontrust European Growth Fund

August 2018 review

The Fund returned -0.3%* in sterling terms in August, compared with the -1.4% return from the MSCI Europe ex-UK index.

 

August’s stockmarket wobble was caused by a cocktail of concerns about emerging market economies and trade. The Turkish lira dived as Donald Trump tweeted that the US would be doubling its steel and aluminium tariffs on Turkey. This, combined with ongoing economic weakness highlighted by inflation running up to 15.9% in July, caused traders to sell out of the lira and other emerging market currencies. Worries about a crisis in Turkey weighed on European stocks, though measures announced by the Turkish central bank helped calm some nerves.

 

Meanwhile, the US-China trade war showed no signs of slowing, with Trump announcing an extra 25% tariffs on US$16bn worth of Chinese goods, to which the Chinese retaliated with similar measures. The US announced a bilateral trade deal with Mexico, though Canada, the third member of Nafta, was left in the cold.

 

Weakness on the MSCI Europe ex-UK Index was broad-based, with no clear sector or style bias. Telecoms (-5.9%) was the worst performing sector in sterling terms, followed by financials (-4.7%) and utilities (-3.8%). IT (+2.3%), consumer staples (+1.5%) and real estate (+0.7%) ended in positive territory.

 

Consensus beating results from Peab (+13.1%) and SimCorp (+12.0%) helped the Fund produce a more resilient return compared to the market. Portfolio management software company SimCorp’s order intake was €9.2m more than the same period last year, beating consensus. The company maintained its full-year expectations of 10%-15% revenue growth and 24.5%-27.5% growth in earnings before interest and taxes. Construction and civil engineering group Peab reported a pretax profit of SEK673bn in the second quarter of 2018, coming in ahead of the market estimate of SEK610m, with all areas of the business contributing to the profit line. The company added that it has a solid order backlog though the housing markets in Sweden and Norway are expected to slow in 2018.

 

Amadeus IT Group (+9.9%) is an information technology company which focuses on the travel and tourism industries. In August, it agreed to acquire New York-based TravelClick from Thoma Bravo for US$1.5bn. TravelClick provides cloud-based reservation and guest management services for independent hotels and marks a “huge step forward” into the hospitality sector for Amadeus.

 

ERAMET (-12.9%), Boliden (-11.1%) and Siltronic (-16.0%) fell as a result of sector weakness. Base metal prices sold off on trade war concerns and a stronger dollar, which weighed on mining and metal groups ERAMET and Boliden. Silicon wafer supplier Siltronic shares declined after poor results from sector peers in the US.

Loomis and Oriflame Holding were sold from the Fund after both companies’ interim results showed a deterioration in cash flow characteristics. Royal Unibrew, a Danish brewing company was added.

Positive contributors to performance included:

Stora Enso (+13.8%), Peab (+13.1%) and SimCorp (+12.0%).

 

Negative contributors to performance included:

Siltronic (-16.0%), ERAMET (-12.9%) and Covestro (-10.3%).


Discrete years' performance** (%), to previous quarter-end:

 

 

Jun-18

Jun-17

Jun-16

Jun-15

Jun-14

Liontrust European Growth I Inc

5.0

29.3

18.9

-1.4

14.2

MSCI Europe ex UK

1.8

28.0

4.9

0.7

15.9

IA Europe Excluding UK

3.1

29.2

4.5

4.1

13.9

Quartile

2

2

1

4

3

 

*Source: Financial Express, as at 31.07.2018, total return (net of fees and income reinvested), bid-to-bid, institutional class.

 

**Source: Financial Express, as at 30.06.2018, total return (net of fees and income reinvested), bid-to-bid, primary class.


For a comprehensive list of common financial words and terms, see our glossary 
here.



Key Risks 


Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in Funds managed by the Cashflow Solution team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Liontrust European Growth Fund holds a concentrated portfolio of stocks, if the price of one of these stocks should move significantly, this may have a notable effect on the value of the respective portfolio. The Liontrust Global Income Fund's expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation.  


Disclaimer

 

The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing. 

Monday, September 17, 2018, 1:40 PM