Liontrust Global Dividend Fund

July 2020 review

The Liontrust Global Dividend Fund returned -1.4% in July, in-line with the MSCI World Index’s return of -1.4% and slightly behind the -0.9% loss from the IA Global Equity Income sector*.

As we enter the next phase of the economic cycle, the market remains extended in two areas. Firstly, valuations of companies who benefit from lockdown have, in some cases, diverged significantly from the underlying value of the companies. In circumstances where this is the case in the portfolio, I have leaned on the sell discipline and exited positions, such as Equinix, or reduced weightings, such as Apple and Microsoft, during July.

On the other hand, as economies reopen, some companies across the Global Leaders watchlist offer excellent long-term opportunities for income investors. During the month, I made one new investment for the Fund in Disney. After the stock price weakened in Q2 following the closure of Disney’s theme parks and the suspension of its dividend.

Whilst theme park performance matters to the shorter-term economic success of the company, the companies direct to consumer service otherwise known as Disney+, Hulu and ESPN+ will drive the longer-term economic success of the company. In fact, during the company’s recent earnings release, Disney reported it has reached a significant milestone of 60m Disney+ subscribers. Given it took Netflix well over 8 years to achieve this milestone – the recent launch of the direct to consumer services is a resounding success.

Given the success of Marvel, Star Wars and Pixar – it will come as no surprise, Disney was able to successfully launch and scale Disney+ at such speed. Whilst the breadth of distribution and depth of the content catalogue is important, the Disney brand is what provides the company with an enormous direct to consumer opportunity.

As the company continues to execute its direct to consumer plan outlined last September, the key metrics I am following is customer churn and investment in content both which determine the profitability of this rapidly growing segment. Importantly, the company has a solid balance sheet, so I expect management to reinstate its dividend either later this year or early 2021.

As we approach either a vaccine or herd immunity, I continue to assess how industries are being reshaped and how this affects the companies we hold in the Fund or companies in the watchlist. In particular, I seek to avoid those companies who are overleveraged or reducing investment in their businesses because these types of companies are least likely to provide opportunities for sustainable income growth.

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.

Wednesday, August 19, 2020, 5:09 PM