Liontrust GF European Strategic Equity Fund

November 2019 review

The Fund’s A4 share class returned 2.1%* in euro terms in November, compared with the 2.7% return from the MSCI Europe Index and 0.7% return from the HFRX Equity Hedge EUR Index.


The MSCI Europe Index reached its highest levels of the year in November as investors weighed up developments in the trade war. Sentiment surrounding a potential phase one agreement between the US and China appeared to oscillate almost daily. At one point, there were positive comments from both camps as the US suggested that it would consider rolling back existing trade levies, which helped send US stocks to record highs.


However, by month end the chances of a deal hung in the balance. This was after President Trump signed legislation supporting pro-democracy protests in Hong Kong, moving directly against China’s call to block the bill.


The Fund’s net exposure ended the month at c.68%. The long book was once again the main driver of the Fund’s overall performance, doubling the return made by the MSCI Europe Index. However, the short book presented a significant headwind.


In equity markets, health care (+3.6%) was an outlier among the gainers in the MSCI Europe Index, which was otherwise dominated by cyclical sectors such as IT (+5.7%), industrials (5.7%) and materials (+3.6%). Utilities (-0.2%) and communication services (+0.2%) were the two worst performers.


Accordingly, the long book’s best performers were from cyclical sectors: luxury apparels company Moncler (+15.1%), Swedish hydraulics company Concentric (+15.0%) and automated storage company Kardex (+13.6%).


SimCorp (+21.3%) stood out after delivering third quarter results ahead of market expectations. The asset management software provider said revenue was €117.4m, a 43% year-on-year increase, beating the €108m consensus estimate. The Q3 numbers included a large order with an Asian investment company, which was signed in December 2018. SimCorp maintained its 2019 guidance for revenue growth of between 12% and 17% and EBIT (earnings before interest and taxes) growth of 25%-28%.


UK-listed Diploma (+17.8%) also released strong results. The company, which supplies seals, filters, specialised wiring and fasteners, saw revenue grow 12% in the year to end September 2019. Adjusted operating profit increased 14%, coming in above the average analyst estimate. Free cash flow remained robust at £56.5m, which led the company to raise its proposed dividend by 15%.


German lender Deutsche Pfandbriefbank (+11.6%) lifted its 2019 pre-tax profit guidance to €205m-€215m following a strong third quarter. It had previously estimated pre-tax profit of €170m-€190m. Net income in the third quarter rose 43% to £70m, partly due to higher net income from realisations on the back of higher prepayment fees.


BW Offshore (-12.0%) was the biggest long book faller, despite also publishing strong third quarter numbers. Earnings before interest, taxes, depreciation and amortisation came in at US$162.1m, beating the consensus estimate of US$156.5m. The company said the result reflected stable contributions from its Floating Production Storage and Offloading (FPSO) fleet, which was offset to some extent by lower oil prices. It added that the combination of more developments and shorter cycle-investments will drive demand for leased FPSOs.


A number of the Fund’s biggest detractors came from the short book. A US educational technology company saw its shares rise after an activist shareholder called for the company to explore strategic alternatives including a sale. A US biotech company’s shares soared after a broker upgrade, highlighting the potential for its antibody programme.


Performance since launch* (%)

LESEF November performance

Discrete monthly returns (A4 share class)*

1yr since 25/04/14
Fund 19.4% 34.6%
MSCI Europe 16.7% 41.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fund 7.6% 1.3% 3.0% -1.6% -3.1% 3.1% -1.6% -0.8% 4.8% 1.9% 2.1%
MSCI Europe 6.2% 4.2% 2.0% 3.8% -4.9% 4.4% 0.3% -1.4% 3.8% 0.9% 2.7%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fund 0.7% 1.1% -1.7% 1.5% 1.2% -2.6% 2.0% -2.0% 1.8% -4.2% -6.3% 1.5%
MSCI Europe 1.6% -3.9% -2.0% 4.6% 0.1% -0.7% 3.1% -2.3% 0.5% -5.3% -0.9% -5.5%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fund 1.5% 2.0% 0.5% 1.4% -2.1% -2.0% -0.2% 1.6% 0.8% 1.1% -3.3% 3.0%
MSCI Europe -0.4% 2.9% 3.3% 1.7% 1.5% -2.5% -0.4% -0.8% 3.9% 2.0% -2.1% 0.8%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fund -0.6% -0.2% -0.8% -0.7% 0.9% 2.3% 1.1% -1.5% 2.7% 2.7% -2.2% 1.2%
MSCI Europe -6.2% -2.2% 1.3% 1.9% 2.3% -4.3% 3.5% 0.7% 0.0% -0.8% 1.1% 5.8%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fund 1.7% 2.4% 1.5% -1.6% 1.3% -1.3% 3.9% -1.6% 2.2% -3.4% 0.8% 0.2%
MSCI Europe 7.2% 6.9% 1.7% 0.0% 1.4% -4.6% 4.0% -8.4% -4.3% 8.3% 2.7% -5.3%
2014 (subsequent to April's change to fund name and objective)
May Jun Jul Aug Sep Oct Nov Dec
Fund 0.2% 0.0% 1.2% -0.2% -0.5% 1.9% 2.4% 0.9%
MSCI Europe 2.5% -0.4% -1.5% 2.0% 0.4% -1.8% 3.2% -1.4%

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







Liontrust GF European Strategic Equity
A4 Acc EUR







*Source: Financial Express, as at 30.11.2019, total return (income reinvested and net of fees). Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 30.09.2019, total return (income reinvested and net of fees).

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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, December 12, 2019, 10:57 AM