Liontrust Global Dividend Fund

Q4 2020 review

The Liontrust Global Dividend Fund returned 11.0% in the fourth quarter, compared with 7.8% from the MSCI World Index and 8.7% from the IA Global Equity Income sector*.

 

For the year, the Liontrust Global Dividend Fund finished strongly returning 16.7% versus MSCI World of 12.3% and 3.3% of the IA Global Equity Income sector. This performance places the Fund in the top quartile for the period. Importantly, after a difficult year for income investors, we are pleased to report income generation was only down 9% from 2019.

In 2021, we expect to return to income growth with some companies we invested in during the height of the pandemic expected to return to paying a dividend in 2021. For example, 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. Disney’s clear inherent strengths in content production, its back catalogue and cross-monetisation through merchandise and its parks make it a strong competitor in the new world of TV streaming and it makes good sense to drive the business wholeheartedly in that direction.

In addition to income growth driven by the re-initiation of some dividends in the Fund, we expect that most of the income growth to be driven by the majority of companies in the Fund sustainably growing dividends above 10% p.a. This cohort of companies provide the ballast to the portfolio and over the long-term drive the income growth within the portfolio.

During the quarter, the Fund's outperformance was driven by a number of stocks with large moves following the announcement in November of the high efficacy of the Covid-19 vaccine. For example, Safran (+35%) in Q4, Disney (+38%), and Anta Sports (+45%). However, not all stocks contributed positively to the Funds return this quarter with American Tower (–12%) and Merck (-11%) detracting from overall performance.

As we have entered a critical stage in the fight against Covid-19 – particularly the new variant. Crucial to this outcome is evidence that the Astra, Moderna and Pfizer vaccines are effective against new Covid variants. Thus far we can be confident but any evidence to the contrary would see an immediate escalation in market volatility.

On a positive note, the Biden presidency and new structure of the Senate will provide investors with increased policy certainty over the next four years, so we see this as a positive development for markets.

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

 


Dec-20

Dec-19

Dec-18

Dec-17

Dec-16

Liontrust Global Dividend C Acc GBP

16.7

34.0

-5.2

6.9

11.1

MSCI World

12.3

22.7

-3.0

11.8

28.2

IA Global Equity Income

3.3

18.6

-5.8

10.4

23.2

Quartile

1

1

3

4

4


*Source: FE Analytics as at 31.12.20


**Source: FE Analytics as at 31.12.20


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, January 25, 2021, 3:54 PM