Liontrust European Opportunities Fund

Q3 2020 review

The Liontrust European Opportunities Fund returned 4.4% over the second quarter, versus the MSCI Europe ex UK Index and IA Europe ex UK sector respective gains of 1.2% and 2.7%*.

The third quarter saw a consolidation in global markets as the ongoing economic recovery was met with a resurgence in virus cases resulting in renewed restrictions on mobility across much of Europe. European markets returned 1.2% for the quarter, led by more cyclical sectors with autos, retail and industrials posting the strongest returns while banks, oil and gas, and telecoms lagged. September saw a surge in new cases, surpassing previous peaks in many countries. However, deaths remain much lower than earlier in the year and it seems that the national lockdowns put in place during the second quarter won’t be repeated. More regional restrictions to contain the spread of the virus still create uncertainty over the strength of the economic recovery as we head into winter.

The Liontrust European Opportunities Fund returned 4.4% during the quarter with key positive contributions coming from both the industrials and IT sectors. With the dislocation in valuations between cyclical and defensive sectors that we had witnessed prior to the coronavirus crisis, and which were exacerbated during the first quarter selloff, we continue to find the most interesting ideas in some of the more cyclical parts of the market. Our focus has been on the liquidity and balance sheet strength of our holdings to ensure they are well positioned to manage the crisis and benefit from the subsequent recovery. There will be important structural changes to both economies and companies as a result of how this crisis has changed the way we do business and changed consumer habits. It is vital to distinguish between those companies who may appear cheap but whose earnings capacity has been permanently impaired, and those whose shares have sold off because of the current recession but who remain well positioned to grow earnings and generate attractive returns for shareholders as the economy recovers.

 

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

 

Sep-20

Sep-19

Sep-18

Sep-17

Sep-16

Liontrust European Opportunities C Acc GBP

-6.6

-10.8

-4.5

45.8

10.0

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

4

4

4

1

4

 

*Source: FE Analytics as at 30.09.20

 

**Source: FE Analytics as at 30.09.20

 

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 Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.

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 21, 2020, 8:59 AM