Liontrust Global Dividend Fund

August 2020 review

The Liontrust Global Dividend Fund returned 4.1% in August compared with 4.6% from the MSCI World Index and 2.2% from the IA Global Equity Income sector.

Global fundamentals are improving with the worst behind us. However, the market is pricing in a large structural shift for some technology companies. We are therefore concerned about a growing cohort of technology companies that are unprofitable but have seen share price appreciate by 5-10x since the start of the year. Some of this optimism has leaked into large technology companies. We have therefore exited positions where our price targets have been met, such as Tencent, Apple, Equinix and Lam Research.

The Fund has underperformed the Index over the last three months due to an underweight position to large technology companies such as Amazon, Tesla, Facebook, Nvidia and Netflix. However, the Fund has held up well in the face of euro and sterling strength and, as currency volatility has subsided over the past month, performance has improved. Longer-term, we anticipate currency exposure to have limited impact on the Fund’s performance, but in the shorter-term certain dynamics will be a factor.

We have built two new positions over the last couple of months. Firstly Disney, reeling from the closure of its theme parks in March, cut its dividend in May (temporally scrapping its semi-annual dividend). In line with a deteriorating outlook, the Disney stock price returned to levels not seen since 2014, providing an excellent opportunity for us to build a new position. Crucially, the future economic prospects for the company is not its theme parks but its direct to consumer business like Disney+, Hulu and ESPN+. With Disney+ hitting 60 million subscribers within the first year (compared to Netflix who took eight years to reach this number), the company is succeeding. Not to mention that Disney has a fortress balance sheet with $27 billion of cash on hand, we therefore expect the company to return to dividend growth next year and provide investors with a steady stream of income for years to come.

Secondly, Rational, who is a Global Leader that has waited patiently on the watchlist for almost three years, but finally reached a price where we could invest. This high-quality German manufacturing business is relatively unknown, but has a market cap of £5bn and not only has an enviable dominant market position, but is also efficiently run by its owner-operator management team. As you would expect from such a high-quality business, it has a net cash position and achieves gross margins of 60% on commercial kitchen equipment versus overleveraged competitors (at c.40%) because it has patents protecting its superior technology. The company sells combination ovens, which can autonomously cook food to a high standard, to the restaurant, hotel and caterer sector with a payback period of 9 months. The equipment not only enables chefs to cook a perfect steak at the touch of a button but also saves significantly on food wastage and time in the kitchen. Rational is entering a more difficult operating period than most, but we believe the demand for hot food will return to previous levels (it is just that the distribution channel may change) and therefore we anticipate the company’s end markets to return to normal over the next 18 months.

In this uncertain environment, we lean on the investment process. We continue to regularly assess each portfolio holdings ability to emerge from this crisis in a stronger position and return to dividend growth in 2021. Importantly, as we emerge from this healthcare crisis, characteristics such as a culture of innovation and a robust balance sheet ensure the companies we invest in are well-positioned to execute as the economy returns to a new normal.

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







Liontrust Global Dividend C Acc GBP






MSCI World






IA Global Equity Income













*Source: Financial Express, as at 30.06.20

**Source: Financial Express, as at 30.06.20

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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.


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.

Friday, September 11, 2020, 3:58 PM