Liontrust GF UK Growth Fund

August 2021 review

The Liontrust GF UK Growth Fund returned 2.9%* in August. The Fund’s comparator benchmark, the FTSE All-Share, returned 2.7%.

 

The macroeconomic backdrop for markets was little changed during August. The highlight was perhaps Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole summit in which he indicated that the US central bank could start tapering its asset purchasing programme.

 

The busy reporting period continued into August, with more holdings issuing updates on trading. Real estate advisor Savills (+19%) reported on a record performance during the first six months of 2021. The group said that trading had been better than expected with residential markets and commercial transactions boosted by improving sentiment and the completion of delayed transactions from the previous year. Overall, revenue increased 18% year-on-year and underlying profit rose substantially to £66.1m from £13.2m in the same period last year. Despite some expectations of higher costs and a moderation in market sentiment, Savills expects its full-year results to be meaningfully ahead of its previous expectations.

 

Next Fifteen Communications (+16%) was another holding to report that trading had been ahead of expectations for the first half of its financial year ending 31 January 2022. In the three months to July 2021, the group saw revenue expand by 40% with organic growth of 29%. All areas of the business saw growth, with Customer Delivery remaining the top performer, while its most recent acquisition Blueshirt Capital Advisors began trading positively. In the second half of the year, organic growth is anticipated to moderate due to strong year-on-year comparables but it is still expected to be ahead of previous guidance for the year as a whole.

 

Among the Fund’s fallers in August was Hargreaves Lansdown (-7.6%) after its results for the year to end June 2021 fell short of consensus forecasts. Pre-tax profit fell 3% to £366m versus the market estimate of £381m, while net business inflows were £8.7bn compared to the £9.1bn consensus estimate. The digital investment platform said it saw a spike in trading volumes due to lockdowns and greater public interest in financial markets; however, this is expected to ease going forward. 

 

Actuator manufacturer Rotork (-6.8%) saw its shares drop after Chief Executive Kevin Hostetler announced his departure. He will step down in June 2022 following three years at the helm. Alongside the announcement, Rotork reported solid interim results for the first half of 2021; revenue rose 1.8% and adjusted operating profit rose 2.4%.

 

Clipper Logistics’ (-3.1%) shares have performed very well in the year-to-date and the release of its full-year results at the end of August saw some profit taking. The specialist in e-retail and returns management logistics recorded a 39% increase in revenue for the 12 months to end April 2021. Underlying EBIT (earnings before interest and taxes) rose 52% and pre-tax profit was up 34%. It added that its new financial year had started strongly and in line with recently upgraded guidance.

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Away from earnings, UK energy regulator Ofgem issued a statement that it intends to accept the remediations proposed by PayPoint (+22%) after last year finding the company may have abused its market position in the over-the-counter market for pre-paid energy customers. PayPoint proposed to remove exclusivity clauses from current and future contracts and make a £12.5m donation to Ofgem’s Energy Industry Voluntary Redress Scheme. Meanwhile, education publisher Pearson (-11%) agreed to pay the US Securities & Exchange Commission US$1m relating to a 2018 data breach.

 

Smiths Group (-7.3%) announced a deal with TA Associates for the US$2.3bn sale of Smiths Medical. Smiths expects to receive net cash proceeds of US$1.8bn and will return c.US$1bn to shareholders via a share buyback.

 

Aggreko exited the portfolio after the completion of its £2.3bn takeover by I Squared Capital Advisors and TDR Capital.

 

Positive contributors included:

PayPoint (+22%), Savills (+19%), Indivior (+18%), Next Fifteen Communications (+16%) and RWS Holdings (+15%).

 

Negative contributors included:

Pearson (-11%), Hargreaves Lansdown (-7.6%), Smiths Group (-7.3%), Rotork (-6.8%) and Brooks Macdonald Group (-2.7%).

 

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

 

Jun-21

Jun-20

Jun-19

Jun-18

Jun-17

Liontrust GF UK Growth C3 Inst Acc GBP

17.2%

-9.4%

2.7%

10.8%

18.9%

FTSE All Share

21.5%

-13.0%

0.6%

9.0%

18.1%

 

*Source: Financial Express, as at 31.08.2021, total return (net of fees and income reinvested), sterling terms, C3 institutional class. Non fund-related return data sourced from Bloomberg.

 

**Source: Financial Express, as at 30.06.2021, total return (net of fees and income reinvested), primary class. 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. 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. Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the GF UK Growth Fund may differ from the performance of the UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.

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, September 13, 2021, 3:05 PM