Liontrust Global Dividend Fund

May 2020 review

The Liontrust Global Dividend Fund returned 4.5%* in May compared with 3.7% from the IA Global Equity Income sector and 7.0% from the MSCI World Index.

 

The market continues to reward companies well positioned to emerge from the lockdown in a stronger position. We anticipate this trend to continue as companies plugged into the new economy benefit from the shift in demand towards the digital economy. According to Satya Nadella, Microsoft has seen two years’ worth of digital transformation in just two months.

 

Whilst we are not in the business of predicting the future - a mug’s game – we invest in companies well positioned to benefit if this shift accelerates. The message from the corporate world is loud and clear, we will adapt to survive in a world that requires digital capabilities. This transformation is accelerating and has significant impact on businesses relying on economies of scale in the physical world.

 

However, as we enter a new phase of the crisis, the bifurcation between “stay-at-home winners” and the “others” has reached breaking point, resulting in irrational dislocations between price and value.


Importantly, during radical uncertainty, the market provides extraordinary opportunities for investors.

 

With economies reopening around the world and the threat of a “second wave” decreasing by the day, we lean on our sell discipline and have exited some stocks where our price target has been exceeded. This enables us to reallocate capital towards more attractive investments within our Global Leader universe as improving demand and increased clarity gives us greater conviction.

 

One company we have recently exited is Lifco, a company we wrote about in early April after building a new position; the stock benefited from a faster than expected V-shape price recovery while the company’s outlook remains moderate. While this is an incredible business, and one we would prefer to hold for a long duration, after building a position in the stock during the aggressive sell-off the price now reflects a very optimist outlook after rising more than 50%.

 

We believe the stronger in, the stronger out will lead to a new cohort of dividend aristocrats once we exit this crisis. Therefore, we will continue to raise the bar on the companies we own as the competitive dynamics in same industries change overnight.

 

Our outlook on dividend distributions for the year remains unchanged. As the Fund performance goes positive year to date, we have increased conviction in our ability to grow income distributions this year.

 

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

 

Mar-20

Mar-19

Mar-18

Mar-17

Mar-16

Liontrust Global Dividend C Acc GBP

5.0

15.6

-1.0

14.6

-6.9

MSCI World

-5.8

12.0

1.3

31.9

-0.3

IA Global Equity Income

-9.8

8.5

-1.4

25.4

-1.8

Quartile

1

1

2

4

4

 

*Source: Financial Express, as at 31.05.20

 

**Source: Financial Express, as at 31.03.20

 

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.

Thursday, June 4, 2020, 3:05 PM