Liontrust GF European Smaller Companies Fund

September 2021 review

The Fund’s A5 share class returned -1.1%* in euro terms in September. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned -4.5%.


The macroeconomic landscape appeared to shift in September, as demand surges and supply shortages across the global economy raised concerns about reflation. The continued emergence from the pandemic meant that demand for goods and services spiked higher, resulting in prices squeezes in several corners of the economy. One of the most notable examples of this was natural gas, which surged to its highest price since 2008. 


Meanwhile, staff shortages across industries, most notably for heavy goods vehicle drivers, meant supply was limited. This was acutely seen in the UK fuel market, where panic buying and Brexit disruption exacerbated the petrol shortage and resulted in staggering queues at the pumps.


In its September monetary policy meeting, the Bank of England noted the material rise in wholesale gas prices, adding that it represented an upside risk to its inflation projections, but these cost pressures will ultimately prove transitory. Nevertheless, the Monetary Policy Committee agreed that some modest tightening of policy will be required to meet its inflation target in the medium term.


The Federal Reserve similarly indicated a hawkish change to policy. Chair Jerome Powell signalled that the central bank would announce a tapering of its $120bn a month asset purchase programme in November, given the strength of US economic recovery. There was also a shift in the Federal Open Market Committee’s expectations for future interest rates, with nine of the 18 person committee now expecting interest rates to rise in 2022, from seven members in the June meeting. 


While the European Central Bank also moderately reduced the pace of its net asset purchases, President Cristine Lagarde maintained that this change was not an indication of tapering. Lagarde said the ECB’s decision was a recalibration of its emergence asset purchase programme, rather than a signal to wind it down.


The sector breakdown of returns reflected the supply squeeze, with the energy sector (+14%) by far the biggest riser in the MSCI Europe Index in euro terms. As well as the spike in natural gas prices, oil prices also continued their recent rise, with Brent crude hitting its highest level since late 2018. This meant Tethys Oil (+21%) ended the month amongst the Fund’s biggest gainers.


Shares in stationery retailer WH Smith (+4.8%) rose after it reported an improvement in trading conditions. In the eight weeks to 28 August 2021, group revenue was running at 71% of the 2019 comparable. This was mainly driven by its Travel division, which has begun to see more footfall as Covid restrictions have eased, recovering to 64% of 2019 revenue in the eight week period compared to 41% in the six months to end February 2021. The company indicated that full-year results for the 12 months to 31 August 2021 will be slightly ahead of expectations and that revenue is anticipated to return to pre-Covid levels in the next two or three years.


Pandora (+3.5%) was another holding to perform well. The Danish jeweller said it is targeting a CAGR (compound annual growth rate) of 5%-7% for organic revenue between 2021 and 2023 and a total revenue CAGR of 6%-8%. It also aims to expand its manufacturing output by 60%, which will help it achieve its long-term ambitions to double its US revenue and triple its revenue in China.


Market research company Ipsos (-4.0%) saw its shares slump after it announced that it will no longer be appointing Nathalie Roos as its Chief Executive following talks with its Chairman Didier Truchot. Ben Page was named as the new candidate for CEO and is expected to begin the role in mid November.


Positive contributors to performance included:

Tethys Oil (+21%), Elior Group (+17%) and BW Offshore (+6.7%).


Negative contributors to performance included:

SimCorp (-12%), Bekaert (-11%) and Concentric (-9.0%).


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 30.09.21, total return (net of fees and income reinvested).


**Source: Financial Express, as at 30.09.21, 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.


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. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term. The portfolio is invested in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in the Fund involves a foreign currency and may be subject to fluctuations in value due to movements in exchange rates. 




This blog 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. Examples of stocks are provided for general information only to demonstrate our investment philosophy.  It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
Friday, October 8, 2021, 1:22 PM