Liontrust European Opportunities Fund

Q4 2020 review

The Liontrust European Opportunities Fund returned 11.3% over the fourth quarter, versus the MSCI Europe ex UK Index and IA Europe ex UK sector respective gains of 9.0% and 9.8%*.

Global markets rallied in the fourth quarter as vaccine announcements led to hopes that mass vaccination will allow for a return to normalcy, despite coronavirus cases rising across the world. The US election was also supportive for global markets with Joe Biden winning the presidency and the Democrats subsequently taking control of both houses, increasing expectations of further fiscal stimulus. European markets returned 8.8% for the quarter, led by more cyclical sectors with banks, travel and leisure, oil and gas, and autos posting the strongest returns while technology, telecoms and consumer staples lagged, and healthcare was the only sector with negative returns.

The Liontrust European Opportunities Fund returned 11.3% during the quarter with key positive contributions coming from both the industrials and consumer discretionary 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. At the stock level, the most significant contributors to the outperformance of the Fund over the final quarter of the year included Alfen, Befesa and Vestas Wind Systems.

The expectation is that 2021 will be a year of rapid recovery and that life will have more or less returned to normal by the end of the year. Although the prevailing view is that 2021 will bring us back to normality, some developments seen in 2020 will persist. Distinguishing between cyclical and structural changes is important in understanding the outlook for 2021 and beyond.

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

 

 

Dec-20

Dec-19

Dec-18

Dec-17

Dec-16

Liontrust European Opportunities C Acc GBP

2.2

12.9

-24.8

21.7

29.1

MSCI Europe ex UK

7.5

20.0

-9.9

15.8

18.6

IA Europe Excluding UK

10.3

20.3

-12.2

17.3

16.4

Quartile

4

4

4

1

1

 

*Source: FE Analytics as at 31.12.20

 

**Source: FE Analytics as at 31.12.20

 

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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 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.

Monday, January 25, 2021, 3:54 PM