Liontrust European Growth Fund

September 2020 review

The Fund returned -0.2%* in sterling terms in September. The MSCI Europe ex-UK index comparator benchmark returned 0.6% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 0.3%.

 

Equity markets in Europe hit a stumbling block in September as concerns about a second wave of coronavirus and associated lockdown measures grew. Daily recorded cases of the virus, particularly in Europe, have risen to levels seen during the initial outbreak and stricter restrictions have been put in place in some regions.

 

The hardest hit areas in the MSCI Europe ex-UK Index were energy (-7.9%) and financials (-6.1%) as investors considered the economic strains of new lockdowns. The best performers, in sterling terms, were consumer discretionary (+4.6%), health care (+3.3%) and materials (+3.0%).

 

Corporate news was thin on the ground during September and many of the Fund’s biggest movers were driven by wider sector trends. For example, Societe Generale (-15%), Bank of Ireland Group (-15%) and BNP Paribas (-14%) were affected by weakness in financials. Swedish oil and gas exploration and production company Lundin Energy (-17%) fell alongside other energy companies. Its share price was also hit by the threat of strikes in Norway’s oil industry, which could see a cut in 23% of the country’s production according to Bloomberg, citing public output figures.

 

The Fund’s overweight allocation to the consumer discretionary was a source of positive attribution. The likes of Peugeot (+9.5%) and Moncler (+9.5%) were among the top contributors, as was Adidas (+10%), which saw its shares rise following strong results from peer Nike.

 

The resilience of the consumer sector was somewhat surprising given the outlook for inflation in the euro area. European Central Bank President Christine Lagarde acknowledged that inflation is expected to be negative over the coming months, reflecting weak energy prices, a stronger euro and a temporary reduction in VAT in Germany. The Bank’s forecasts show that inflation is expected to be below its target of close to 2% for at least the next two years. Lagarde reiterated that the governing council stood ready to act to ensure inflation moves towards its aim in a sustained manner.

 

Atlas Copco (+7.0%) was a strong performer after announcing a US$7/share deal to acquire Nasdaq-listed Perceptron. The company is a leading supplier of automated metrology and robot guidance, which Atlas Copco believes will enhance its Smart Factory Automation business segment.

 

Positive contributors to performance included:

Adidas (+10%), Peugeot (+9.5%) and Moncler (+9.5%)

 

Negative contributors to performance included:

Lundin Energy (-16%), Societe Generale (-15%) and Bank of Ireland Group (-15%)

 

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

 

 

Sep-20

Sep-19

Sep-18

Sep-17

Sep-16

Liontrust European Growth I Inc

3.5

-3.0

6.8

16.7

30.0

MSCI Europe ex UK

-0.5

5.8

1.3

21.4

20.0

IA Europe Excluding UK

3.1

2.2

1.9

21.9

18.4

Quartile

2

4

1

4

1

 

*Source: Financial Express, as at 30.09.20, 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 30.09.20, 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.

Wednesday, October 14, 2020, 12:35 PM