Liontrust Global Income Fund

April 2021 review

The Fund returned 4.0%* in sterling terms in April. The MSCI ACWI High Dividend Yield Index comparator benchmark returned 1.8% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was 2.7%.

 

The drivers of April’s equity market gains were the familiar themes of improving economic outlook due to the robust global vaccine rollout, while governments and central banks maintained accommodative policy. US Federal Reserve Chair Jerome Powell said the central bank is a long way from its economic goals, indicating that any tightening in monetary conditions is still some distance in the future. In addition, President Joe Biden unveiled plans for fresh stimulus worth US$1.8 trillion for American families, which would be funded by tax hikes on the wealthy.

 

All sectors in the MSCI World Index ended April higher in sterling terms. The best performers were communication services (+6.7%), real estate (+6.2%) and IT (+5.3%). Energy (+0.2%) was a notable laggard this month.

 

Financials were the biggest source of positive attribution for the Fund, with Bank of Ireland (+17%) and Navient (+17%) the main highlights. The latter released first quarter results that came in ahead of analysts’ forecasts. The US student loans company reported a large increase in core earnings per share (EPS): US$1.65 from the US$0.46 it reported a year before. Analysts had estimated a core EPS figure of US$0.77. The performance was driven by the company’s consumer lending division, which saw core earnings rise to US$234m from US$54m.

 

ManpowerGroup (+22%), the US-based recruiter, saw improved momentum for its brands in Q1, which reflected the strengthening global economy and the execution of strategic initiatives. Revenue increased 7% year-on-year, while net earnings surged to US$62m from US$1.7m. The company expects momentum to carry into the second quarter and issued diluted EPS guidance of US$1.36-US$1.44, which was higher than the market estimate of US$1.13.

 

Data storage company Seagate Technology (+21%) commented on increasing demand for mass capacity storage in the third quarter of its financial year, which aided the performance of its hard disk drive product range. In the three months to 2 April, the company saw revenue remain largely stable year-on-year at US$2.7bn, but diluted EPS rise 14% to US$1.48. For the fourth quarter, it expects EPS to rise to c.US$1.60 and revenue to c.US$2.85bn

 

Away from earnings, shares in German fertilizer company K+S (+11%) leapt after the US Department of Justice permitted the sale of its Americas salts business to Stone Canyon. The company added that it does not see any further antitrust hurdles to the US$3.2bn sale.

 

Positive contributors to performance included:

ManpowerGroup (+22%), Seagate Technology (+21%) and Bank of Ireland (+17%).

 

Negative contributors to performance included:

Qualicorp Consultoria e Corretora de Seguros (-7.6%), Lukoil (-5.5%) and Stellantis (-4.8%).


From 1 May 2021, Storm Uru and James Dowey (part of our Global Equity investment team) will take over the management of the Global Income Fund. The investment process applied to the Global Income Fund will alter in line with the change of the fund management team from 1 May to the Global Innovation approach to the Global Equity process. Liontrust will be proposing to simplify its range and merge the Global Income Fund into the Global Dividend Fund (which is also managed by the Global Equity investment team and has a similar investment objective). This merger, which is scheduled to complete in late June or early July, will be subject to FCA approval and a vote by investors in the Global Income Fund.

 

The Fund has an income target benchmark of the yield on the MSCI World Index. The Fund’s most recent income distribution was announced on 31 December 2020. Its distributions over the 12 months to 31 December 2020 – expressed relative to the Fund’s price on 31 December 2019 – give a 12-month yield of 3.7%. The MSCI World Index yield on the same basis was 2.0%.

 

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

 

Mar-21

Mar-20

Mar-19

Mar-18

Mar-17

Liontrust Global Income I Inc

52.7%

-22.3%

4.7%

2.3%

24.8%

MSCI ACWI High Dividend Yield Index

24.6%

-7.8%

12.1%

-2.1%

29.4%

IA Global Equity Income

32.0%

-9.8%

8.5%

-1.4%

25.4%

Quartile

1

4

4

1

3

 

*Source: Financial Express, as at 30.04.21, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.

 

**Source: Financial Express, as at 31.03.21, total return (net of fees and income reinvested), bid-to-bid, primary class.

 

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 Cashflow Solution team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Liontrust European Growth Fund holds a concentrated portfolio of stocks, if the price of one of these stocks should move significantly, this may have a notable effect on the value of the respective portfolio. The Liontrust Global Income Fund's expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. 

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, May 13, 2021, 11:09 AM