Liontrust Global Income Fund

March 2019 review

The Fund returned 1.8%* in sterling terms in March compared with 2.2% average return from funds in the IA Global Equity Income sector.


The same factors behind the market’s year-to-date rise were at play again in March: easing US-China trade tensions and more dovish central bank policy. Starting with the former, President Trump declared that the trade negotiations with China were “coming along nicely” though he stated that current tariffs will remain in place until he’s sure Beijing will comply with any potential agreement. The trade war, which escalated in 2018, has dragged on global economic growth, so any indication that there could be a benign resolution tends to lift markets around the world.


Central bank policy has been a key feature for markets. Since the turn of the year, the US Federal Reserve has communicated a more “patient” approach to adjusting its monetary stance. In March, the Federal Open Market Committee’s estimates for future interest rates implied zero rate increases in 2019, which was scaled back from two forecast rises back in December. The policy setting committee also confirmed it would pause quantitative tightening by the end of September, citing slowing economic growth, household spending and business investment during the first quarter.


The European Central Bank also made a small adjustment to its forward guidance. It had previously stated that interest rates would remain at present levels until summer 2019, but in March the Governing Council guided that rates will be on hold until the end of 2019 as inflation remained sluggish in the euro area. The bank also unveiled new targeted longer-term refinancing operations (TLTRO-III) to boost the banking system.


These central bank moves provided a broad uplift to global markets, with the MSCI World Index returning 3.4%. Real estate (+6.9%), consumer staples (+6.5%) and IT (+6.5%) were the best performing sectors in MSCI World in sterling terms. The only sector to register a decline was financials (-0.6%), as banks typically benefit from higher interest rates.


The Fund lagged the returns made by the MSCI World largely due to its underweight allocation to the US, which benefited from a rise in the US dollar. Despite valuations in some global markets coming off their recent historical highs, the US market continues to trade at excessive levels, and we maintain our underweight position.


However, one of the Fund’s US holdings Target Corp (+12.8%) was one of its top performers, after posting strong results for the festive period. The retailer stated that comparable sales in the fourth quarter of 2018 rose 5.3%, with store sales showing an uplift of 2.9% and digital growing 31%. It guided to a mid-single digit increase in comparable sales and operating income for 2019 and adjusted earnings-per-share of US$5.75 - US$6.05, which was ahead of consensus forecasts.


Another stock to post a strong performance was Canadian wealth management company Gluskin Sheff + Associates (+28.6%). The company agreed to be bought by private equity company Onex Corp for C$14.25 a share – a 28% premium to Gluskin’s share price.


The main detractors from the Fund’s performance did not have specific corporate news, with stocks such as US financial services company BGC Partners (-9.5%) and Canadian mortgage insurer Genworth MI Canada (-8.2%) suffering during the weakness in the financial sector. Dutch bank ING Groep (-6.7%) continued to be haunted by allegations of money laundering. In March the Bank of Italy stopped the lender from taking on new clients in the country after finding shortcomings in money laundering checks. 


Positive contributors to performance included:

Gluskin Sheff & Associates (+28.6%), Simplo Technology (+27.1%) and Charter Hall Group (+19.1%).


Negative contributors to performance included:

BGC Partners (-9.5%), Eutelsat Communications (-9.6%) and De La Rue (-9.1%)


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








Liontrust Global Income I Inc






IA Global Equity Income













*Source: Financial Express, as at 31.03.2019, 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 31.03.2019, total return (net of fees and income reinvested), bid-to-bid, primary class.

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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. 


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.

Wednesday, April 17, 2019, 1:53 PM