Liontrust European Growth Fund

June 2021 review

The Fund returned -0.3%* in sterling terms in June. The MSCI Europe ex-UK index comparator benchmark returned 1.8% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 1.2%.

 

Despite a mid-month wobble following a more hawkish than expected Federal Reserve statement, the MSCI Europe Index ended June higher, its fifth consecutive month of gains. The Federal Open Market Committee’s (FOMC) dot plot of members’ future interest rate expectations indicated that interest rates are forecast to start to rise in 2023, having previously been predicted to remain constant until 2024. Economic projections were optimistic, with the median estimate of GDP growth revised up to 7% for 2021 versus 6.5% in March, while core inflation is forecast to be 3% vs 2.2%. 

 

There was a sharp reversal of recent trends in equity market leadership, with growth outperforming value. The MSCI Europe ex-UK Growth Index posted a return of 3.4% in sterling terms while the MSCI Europe ex-UK Value Index ended 0.1% lower. Given its value bias, this factor reversal weighed on the Fund’s returns.

   

From a sector perspective, healthcare (+6.6%), IT (+4.2%) and consumer staples (+2.7%) were the best performers, while utilities (-2.8%) and financials (-1.6%) were the only sectors to end lower.

 

The weakness in financial stocks weighed on the Fund, with Deutsche Pfandbriefbank (-15%) and Bank of Ireland (-14%) both among the heaviest fallers. The latter’s share price fell after the Irish government announced that it planned to sell part of its 14% shareholding in the company over a six-month period.

 

French electrical, heating, lighting and plumbing equipment distributor Rexel (+5.5%) experienced better-than-expected activity during the first half of 2021, benefiting from a favourable global environment. The company commented on accelerated demand for electrification and digitalization and achieved market share gains during the period. Danish pharmaceutical company Novo Nordisk (+9.0%) saw its shares rise after its weight loss treatment Wegovy gained approval from the US Food and Drug Administration.

 

Positive contributors to performance included:

ISS (+13%), Novo Nordisk (+9.0%) and Coloplast (+6.9%)

 

Negative contributors to performance included:

Deutsche Pfandbriefbank (-15%), Bank of Ireland (-14%) and Imerys (-7.6%)

 

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

 

Jun-21

Jun-20

Jun-19

Jun-18

Jun-17

Liontrust European Growth I Inc

43.8%

2.2%

-1.7%

5.0%

29.3%

MSCI Europe ex UK

21.8%

0.0%

7.3%

1.8%

28.0%

IA Europe Excluding UK

23.7%

0.9%

3.3%

3.1%

29.2%

Quartile

1

2

4

2

3

 

*Source: Financial Express, as at 30.06.21, 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 30.06.21, 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.

Tuesday, July 13, 2021, 1:33 PM