Liontrust GF European Smaller Companies Fund

February 2020 review

The Fund’s A5 share class returned -10.5%* in euro terms in February. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned -8.1%.


The month was dominated by reports documenting the spread of coronavirus and government actions to contain it. In February, cases of the disease outside of its origin in Wuhan became more frequent and, in Europe, Italy was the worst struck – leading its government to cancel the Venice carnival and impose a quarantine across a number of towns.


Investors focused on the potential impacts from the disruption caused by coronavirus on economic activity. Though little is still known about the disease, investors are anticipating a significant hit to the global economy and possibly significant stimulus from national authorities.


The result in markets was a broad-based sell-off in equities, while defensive safe havens such as gold and bonds saw greater interest. The most resilient sector in the MSCI Europe Index was utilities (-2.8%), while energy (-14.5%) and materials (-9.6%) were the worst hit areas. Commodity prices came under pressure as traders factored in the impact to demand from coronavirus. 


The Fund’s exposure to the energy sector weighed on returns. The likes of BW Offshore (-21.9%) and Tethys Oil (-20.8%) were among the heaviest fallers. Coronavirus also caused BW Energy, a spin-off of BW Offshore’s exploration and production business, to reduce its valuation target for its initial public offering.


Meanwhile, the expected reduction in consumer spending and travel hit books and stationery retailer WH Smith’s (-21.5%), which has a significant presence in airports and train stations.


SimCorp (-13.4%) was one of the holdings to release news. The investment software company reported solid 2019 results, with revenue growing 19%, while earnings before interest and taxes (EBIT) rose 24%. However, investors were disappointed with its soft guidance for 2020, where the company anticipates revenue growth of 5-10%. It added that it will be increasing research and development expenditure to 20% of revenue.

Positive contributors to performance included:

There were no positive contributors during this period.


Negative contributors to performance included:

BW Offshore (-21.9%), WH Smith (-21.5%) and Tethys Oil (-20.8%).


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




Liontrust GF European Smaller Companies A5 Acc EUR



MSCI Europe Small Cap Index




*Source: Financial Express, as at 29.02.20, total return (net of fees and income reinvested). Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 31.12.19, total return (net of fees and income reinvested). Discrete data is not available for five full 12 month periods due to the launch date of the portfolio. Investment decisions should not be based on short-term performance.


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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, March 12, 2020, 9:49 AM