Liontrust Global Dividend Fund

November 2019 review

During October, the Fund returned 6.0% compared to the benchmark of 2.5% and the IA global income sector of 2.1%.

A number of important milestones were reached over the month including the successful launch of Disney +. However, the major headline during the month passed relatively unnoticed by the market and this was that the US became a net exporter of crude oil and refined petroleum products in September, the first full month it’s done so since the 1940s, according to the Energy Information Administration.

This matters because the US has leapt to the top of the oil food chain thanks to a boom in unconventional oil and gas: shale drilling. Dovetail with this fact that the breakeven cost of production for the swing producers in the Permian basin, West Texas, continues to fall and we expect oil and gas prices to remain lower for longer. Longer term, this lowers the cost of energy inputs for consumers and manufacturers, creating a constructive backdrop for global growth.

While valuations in some areas of the market have now become extended, we remain positive on investing in global leaders – those companies which have the ability to continue to drive earnings growth above the market average and achieve multiple expansion. One important characteristic of consumer brands that we invest in is their ability to position themselves close to the consumer to cut out the middle man. Traditionally, this would enable a company to achieve premium margins compared to wholesale but would require significant capital investment.

With mobile technology, however, companies such as Disney are now able to launch a platform business with low costs of distribution to monetise their incredible content library and benefit from the data feedback loop to optimise content creation. Due to Disney’s business model pivot, enviable content library and visionary management team, the company is an excellent example of companies that we hold in the Fund that are able to grow their dividend above 10% as they benefit from execution of a longer-term business strategy.

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.

Wednesday, December 11, 2019, 11:34 AM