Liontrust Global Dividend Fund

Q1 2021 review

The Liontrust Global Dividend Fund returned 4.5% in the first quarter, compared with 4.0% from the MSCI World Index and 5.0% from the IA Global Equity Income sector (both comparator benchmarks)*.

 

Importantly, after a difficult year for income investors in 2020, we project a rebound in income generation with expected income distribution growth in 20% in 2021. During Q1, the strong returns were driven by a number of investments including Boeing, JP Morgan and Alphabet, however, not all stocks contributed positively to the Funds returns this quarter with Verisk, Alibaba and Roper Technologies dragging on returns. From a sector perspective, strong returns were led by positions in the Information technology, industrials and utilities sector, while we saw detractors coming from the materials and communication sectors.

As we enter Q2, we expect a number of companies who cut their dividends in 2020 to re-initiate shareholder pay-outs – for instance, Disney which acted quickly to cut its dividend in Q2 2020 is well-positioned to return to returning capital to shareholders as its success pivot to its DTC business starts to become a meaningful driver of revenues and longer-term profitability.

As the global economic outlook continues to improve and vaccination programmes make good progress a number of opportunities present themselves across our watchlist as stock prices lurch in response to the changing market conditions. These conditions present respite to the shares of vulnerable companies hit hard by the pandemic and recession over the past year and a challenge to those of high growth companies with long cash flow duration, whose valuations are particularly sensitive to long term interest rates.

We continue to focus on buying excellent companies with high chances of long-term success and we are excited by numerous opportunities that we currently see presenting themselves. The Q1 earnings season kicked off this week and our main area of focus will be on management guidance for the months ahead as the economy continues to recover.

So, we remain vigilant on valuation as market enthusiasm continues to drive a short-term dislocation between price and value in some sectors. However, we are confident that we hold a portfolio of reasonably priced stocks with plenty of upside to our average 3-year price target with plenty of opportunities across our watchlist.

As the economy hopefully continues to normalise over the rest of the year, we believe it is likely that acute economic sensitivity will become less of a dominant factor in relative stock returns and longer-term considerations and operational quality will become more important again. This is the normal sequence of events in markets during economic recoveries and while this time is clearly unique in many ways, we do not expect this aspect of it to ultimately be substantially different. We believe the Fund is very well positioned for the road ahead due to the strength of the businesses in which we invest and their current valuation potential.

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

 

Mar-21

Mar-20

Mar-19

Mar-18

Mar-17

Liontrust Global Dividend C Acc GBP

38.1%

5.0%

15.6%

-1.0%

14.6%

MSCI World

38.4%

-5.8%

12.0%

1.3%

31.9%

IA Global Equity Income

32.0%

-9.8%

8.5%

-1.4%

25.4%

Quartile

2

1

1

2

4

 

*Source: FE Analytics as at 31.03.21

 

**Source: FE Analytics as at 31.03.21. Quartile generated on 13.04.21

 

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, April 22, 2021, 3:07 PM