Liontrust Global Income Fund

December 2020 review

The Fund returned 3.9%* in sterling terms in December. The MSCI ACWI High Dividend Yield Index comparator benchmark returned 1.9% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was 1.5%.

 

December showed no respite in newsflow during what was an extraordinary year. In the US, following lengthy negotiations, Congress approved a US$900bn stimulus package to support its economy during the pandemic. However, President Trump pushed for a larger package worth US$2,000 a person, which would be roughly US$460bn more than the approved bill.

 

The EU and UK finally agreed on a trade deal, bringing an end to much of the significant uncertainty surrounding the situation as the Brexit transition period came to a close. The threat of a no deal exit had loomed large throughout the month, but an agreement which maintained tariff-free trade on most goods was eventually reached and swiftly ratified by officials on both sides. Markets reacted positively, with sterling ending the year at its highest level against the US dollar.

 

During the negotiations, the UK began rolling out its vaccination programme but cases of Covid-19 climbed significantly higher. The government confirmed the presence of a new, faster spreading strain of the virus. Plans for easing restrictions for Christmas were quickly scrapped for the worst hit areas, as hospitalisations approached similar levels to the April peak.

 

Despite this new threat, equity markets registered a gain during December, which helped the MSCI World Index rise 12% in sterling terms during 2020. In December, the best performers were materials (+3.6%), IT (+3.4%) and consumer discretionary (+3.2%). The only sector to end in the red was utilities (-0.3%).

 

Material stocks were also a feature of the Fund’s top performers, with the likes of Rio Tinto (+13%) and Anglo American (+9.5%) registering gains. The miners’ share prices rose following a rally in iron ore futures as data showed robust Chinese steel production. Bank of Ireland (+25%) was another holding to benefit from macroeconomic developments; Irish mortgage approval data for October showed its fastest rise since 2011.

 

Jeweller Pandora (+8.9%) said trading in Q4 had been strong, with positive organic growth in October and November, while revenue was above expectations in December. 10% of physical outlets were closed due to Covid-19 restrictions, but the negative impact was offset by strong online growth. As a result, it anticipates organic growth for 2020 will now be at least 1 percentage point better than the top end of its -14% to -17% guidance. Operating margin is expected to be at the top end of its 17.5% - 19% forecast.

 

Magna International (+12%), the Canadian developer of mobility technology for the automotive industry, announced a joint venture with LG Electronics to manufacture e-motors, inverters and on board chargers and related e-drive systems. Magna International would own a 49% stake in the JV worth US$453m.

 

Positive contributors to performance included:

Bank of Ireland (+25%), GWA Group (+24%) and Rio Tinto (+13%).

 

Negative contributors to performance included:

Kimberly-Clark Group (-5.0%), Gaztransport & Technigaz (-4.3%) and Target Corp (-4.0%).

 

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:

 

 

Dec-20

Dec-19

Dec-18

Dec-17

Dec-16

Liontrust Global Income I Inc

0.5

15.1

-5.8

8.4

28.5

MSCI ACWI High Dividend Yield Index

-1.4

19.1

-1.3

8.6

31.3

IA Global Equity Income

3.3

18.6

-5.8

10.4

23.2

Quartile

4

4

3

3

3

 

*Source: Financial Express, as at 31.12.20, 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 31.12.20, 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, January 14, 2021, 4:05 PM