Liontrust Global Income Fund

May 2020 review

The Fund returned 4.4%* in sterling terms in May. The MSCI ACWI High Dividend Yield Index comparator benchmark returned 3.4% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was 3.7%.

 

Global equities continued to claw back lost ground as countries began tentatively reopening select parts of their economies. Lockdowns across the continent, and other areas of the world, were imposed to contain the spread of Covid-19 but have also strangled economic growth. The easing of lockdown measures and evidence of a suppression in coronavirus cases provided support to equities.

 

However, there are still a number of factors that will keep investors uneasy. Outside of the direct Covid-19 threat, US-China tensions are chief among them. Trump threatened economic measures against China and accused its government of mishandling the coronavirus outbreak. The US-China trade war had been one of the main drags to global growth in the past few years so a resumption of it while the world is battling coronavirus would be unwelcome.

 

The gain made by the MSCI World Index was broadly split across the sectors. IT (+10.1%), materials (+8.9%) and industrials (+8.7%) were the best performers, while real estate (+3.3%), energy (+3.8%) and consumer staples (+4.2%) were the biggest laggards.

 

Materials was the biggest sector contributor for the Fund, with Anglo American (+20.2%), Rio Tinto (+17.1%) and Boliden (+7.9%) all gaining. The sector was buoyed by the relaxation of lockdowns, which could see commodity demand return. Meanwhile, car manufacturer Peugeot (+12.9%) found support from French President Macron, who unveiled an €8bn stimulus package for the French auto industry, including subsidies for electric and hybrid purchases.

 

Peugeot was among a handful of new additions to the Fund in May. Others included Canadian mobility technology company Magna International, US recruiter ManpowerGroup, Danish jeweller Pandora and US printer manufacturer Xerox Holdings. We sold positions in EDP – Energias de Portugal and Unipol Gruppo.

 

US retailer Target (+14.2%) was another gainer after reporting strong first quarter results which came in ahead of consensus expectations. The company said that comparable sales grew 10.8%, beating forecasts for a 7.5% rise, as customer baskets grew 12.5% on average. Unusually high digital volumes saw digital sales surge 141%.

 

Genworth MI Canada’s (-6.3%) first quarter results showed a 1% decline in net operating income due to higher expenses and lower operating investment income. The company, however, declared a dividend of C$0.54 per share as expected.

 

Positive contributors to performance included:

Anglo American (+20.2%), Rio Tinto (+17.1%) and EDP – Energias de Portugal (+16.5%).

 

Negative contributors to performance included:

VTech Holdings (-18.4%), Play Communications (-9.8%) and Xerox Holdings (-9.0%).

 

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 2019. Its distributions over the 12 months to 31 December 2019 – expressed relative to the Fund’s price on 31 December 2018 – give a 12 month yield of 5.8%. The MSCI World Index yield on the same basis was 2.2%.

 

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

 

 

Mar-20

Mar-19

Mar-18

Mar-17

Mar-16

Liontrust Global Income I Inc

-22.3

4.7

2.3

24.8

-3.3

MSCI ACWI High Dividend Yield Index

-7.8

12.1

-2.1

29.4

1.3

IA Global Equity Income

-9.8

8.5

-1.4

25.4

-1.8

Quartile

4

3

3

2

4

 

*Source: Financial Express, as at 31.05.20, 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 31.03.20, 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.

Friday, June 12, 2020, 3:32 PM