Liontrust Global Dividend Fund

June 2020 review

The Liontrust Global Dividend Fund returned 0.9%* in June, compared with 2.7% from the MSCI World Index and 2.1% from the IA Global Equity Income sector.

A key question as we reopen economies around the world is - how will industries change? One fact we do know so far is that demand within industries has tipped towards those companies with a digital footprint. But what about longer-term? In our opinion – companies with leading industry positions will have the opportunity to their extend competitive positions.

 

Fundamental characteristics such as balance sheet strength and market power significantly help, but a culture of innovation is what will enable these companies to pivot business models, develop new products and capture new economic profits as some industries are reshaped overnight.

 

To us, a culture of innovation is a relentless focus on product improvement, customer-centric mentality, and disciplined investment in the business to drive further success. Let's just touch on one of these characteristics using Intuit, a portfolio holding, who has a relentless focus on product improvement.

 

Intuit is an excellent example of a company with a visionary leader who spotted the changing landscape in accounting software from off-the-shelve software packages to cloud SaaS products. Intuit with its relentless focus on product improvement quickly pivoted its business model and products to the cloud completely disrupting its core accounting products. The company understands that true innovation starts with its own culture and is successful by overcoming fears of change, as well as empowering employees to implement change. The company actively seeks continuous transformation to build a future proof company – now it’s going after Sage and SAP’s fat profit pools in the small-to-medium-sized enterprises…. watch out European accounting stalwarts.

 

Why does this matter? Because over the past decade, Intuit has consistently shown when customer preferences change, the company can adapt and move with the market, whereas, competitors have been slow to respond.

 

With Q2 earnings lost, over the next month the focus on the earnings calls will be on what the companies are doing to prepare for a more competitive landscape when we emerge. More specially, can those companies who have been slow to embrace digital transformation catch up? We maintain the view that many will be unable to catch up and global leading businesses will continue to extend their leadership position.


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

 

Jun-20

Jun-19

Jun-18

Jun-17

Jun-16

Liontrust Global Dividend C Acc GBP

9.9

17.2

8.8

13.3

-4.5

MSCI World

5.2

9.7

8.9

22.2

13.3

IA Global Equity Income

-2.6

8.4

3.6

19.2

9.6

Quartile

1

1

2

4

4

 

*Source: Financial Express, as at 30.06.20

  

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. 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.

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, July 13, 2020, 9:49 AM