Liontrust Global Dividend Fund

Q4 2019 review

During the fourth quarter of the year, the Liontrust Global Dividend Fund returned 2.8%*, compared to returns of 1.4% and 1.2% from the MSCI AC World Index and the IA Global Equity Income sector, respectively. Over the course of 2019, the Fund topped the IA Global Equity Income sector with returns of 34.0%, compared to the sector average return of 18.6% and a 21.7% gain from the MSCI AC World Index.

 

Market Overview

Unsurprisingly, technology led the market in 2019 with the sector up over 38% in 2019 (this was predominately driven by Apple, which returned 76% over the year). Apple surprised the market after responding quickly to softening Chinese demand by lowering the average selling price of iPhones sold in Asian markets. This was followed by a better than expected iPhone 11 launch and continued expansion of its services revenue. However, the major catalyst for the stock was the unanticipated success of the wearables division, in particular, the Airpods and iWatch. In 2020, we expect earnings to inflect once the 5G iPhone replacement cycle begins. Given the stock performance over the last 12 months, our rules-based portfolio construction approach results in us taking profit when stock prices start to diverge from the underlying value of the company. Therefore, after starting 2019 with a weighting in the portfolio of 3.6% in Apple, we finish the year with a weighting approaching 2%.

 

Portfolio Overview

Whilst valuations in some areas of the market have now become extended, we remain positive on investing in Global Leaders − who have the ability to continue to drive earnings growth above the market average and achieve multiple expansion. Rightmove is an example of such a stock and one which is well positioned to benefit over the next three years after a resounding Conservative Party victory in the UK’s parliamentary elections last month. Rightmove benefits from strong network effects in the online real estate advertisement market, which causes industry value to accrue to a handful of companies. Rightmove has built a database of properties that often acts as the first step in buying a home, enabling it to maintain a high and stable market share with strong pricing power. Becoming the de facto home of online real estate listings, an accolade that drives traffic to their platform, makes them more attractive to property advertisements and further entrenches their competitive advantage. Importantly, revenues comfortably cover platform maintenance and upgrades, leaving plenty of opportunity for management to pay a steadily increasing dividend alongside opportunistic buybacks.

Outlook

As we enter 2020, we remain optimistic about the sustainability of the structural bull market and continue to look for investment opportunities presented by periods of market volatility.

 

 

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

 

Dec-19

Dec-18

Dec-17

Dec-16

Dec-15

Liontrust Global Dividend C Acc

34.0

-5.2

6.9

11.1

3.2

MSCI AC World

21.7

-3.8

13.2

28.7

3.3

IA Global Equity Income

18.6

-5.8

10.4

23.2

1.5

Quartile

1

2

4

4

3

 

*Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)

 

**Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)

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, January 23, 2020, 3:56 PM