Liontrust European Growth Fund

December 2020 review

The Fund returned 4.9%* in sterling terms in December. The MSCI Europe ex-UK index comparator benchmark returned 2.1% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 2.6%.


December showed no respite in newsflow during what was an extraordinary year. The EU and UK finally agreed on a trade deal, bringing an end to much of the significant uncertainty surrounding the situation as the Brexit transition period came to a close. The threat of a no deal exit had loomed large throughout the month, but an agreement which maintained tariff-free trade on most goods was eventually reached and swiftly ratified by officials on both sides. Markets reacted positively, with sterling ending the year at its highest level against the US dollar.


During the negotiations, the UK began rolling out its vaccination programme but cases of Covid-19 climbed significantly higher. The government confirmed the presence of a new, faster spreading strain of the virus. Plans for easing restrictions for Christmas were quickly scrapped for the worst hit areas, as hospitalisations approached similar levels to the April peak.


Despite this new threat, equity markets maintained gains for December and the MSCI Europe ex-UK Index rose 7.5% in sterling terms for 2020 as a whole. In December, the best performers were IT (+5.5%), consumer discretionary (+5.4%) and real estate (+4.6%). The only sector to end in the red was communication services (-0.6%).


The Fund’s consumer discretionary holdings performed the best in attribution terms, with Moncler (+22%), Peugeot (+13%), Adidas (+11%) and Pandora (+8.9%) all posting gains. Luxury apparel company Moncler announced an agreement to acquire Stone Island in a €1.15bn cash-and-share deal. The deal values Stone Island at 16.6 times its 2020 earnings before interest, tax, depreciation and amortisation.


Jeweller Pandora (+8.9%) was another holding to issue a positive update. It said trading in Q4 had been strong, with positive organic growth in October and November, while revenue was above expectations in December. 10% of physical outlets were closed due to Covid-19 restrictions, but the negative impact was offset by strong online growth. As a result, it anticipates organic growth for 2020 will now be at least 1 percentage point better than the top end of its -14% to -17% guidance. Operating margin is expected to be at the top end of its 17.5% - 19% forecast.


Bank of Ireland (+25%) was the best performer during December. It share price appreciated after data for October showed the fastest rise in Irish mortgage approvals since 2011.


One of the few detractors was Danish facility services company ISS (-7.7%) after it announced a “refreshed strategy”. It said that an extensive review found flaws in the execution of its previous strategy and it has decided to divest from areas of its business representing DKr4bn. This is expected to generate DKr2bn in net proceeds over 2021-2022, but the company has suspended its dividend until the end of 2022.


Positive contributors to performance included:

Bank of Ireland (+25%), Moncler (+22%) and Peugeot (+8.9%)


Negative contributors to performance included:

ISS (-7.7%), Gaztransport & Technigaz (-4.3%) and Total (-1.6%)

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








Liontrust European Growth I Inc






MSCI Europe ex UK






IA Europe Excluding UK













*Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, primary class.


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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. 


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.

Thursday, January 14, 2021, 4:05 PM