Liontrust Global Income Fund

November 2019 review

The Fund returned 2.0%* in sterling terms in November compared with a 1.3% return by the MSCI ACWI High Dividend Yield Index and the 2.0% average return from funds in the IA Global Equity Income sector.

 

The Fund’s most recent income distribution was announced on 30 June 2019, taking the Fund’s 12 month income yield to 5.0%. The Fund targets an income level in excess of the yield on the MSCI World Index. The index yielded 2.7% over the same period.

 

The MSCI World Index reached an all-time high in November as investors weighed up developments in the trade war. Sentiment surrounding a potential phase one agreement between the US and China appeared to oscillate almost daily. At one point, there were positive comments from both camps as the US suggested that it would consider rolling back existing trade levies, which helped send US stocks to record highs.

 

However, by month end the chances of a deal hung in the balance. This was after President Trump signed legislation supporting pro-democracy protests in Hong Kong, moving directly against China’s call to block the bill.

 

For the portfolio, it was a busy month for third quarter company reporting. A number of holdings upgraded full-year guidance including US retailer Target (+17.7%), which was the Fund’s best performer. It raised its adjusted earnings per share outlook to US$6.25-US$6.45 versus prior guidance of US$5.90-US$6.20 after it reported on another strong quarter. Comparable sales in the three months to end September grew 4.5% and there was a 3.1% increase in comparable traffic, both metrics holding up well in a difficult retail environment.

 

American biotechnology company Amgen (+10.8%) was another holding to raise guidance in November. Alongside its announcement of the acquisition of worldwide rights to Otezla, an arthritis treatment, the company upgraded its revenue forecast. It now forecasts 2019 revenue of US$23.1bn-US$23.3bn compared to its previous estimate of US$22.8bn-US$23.0bn.

 

German lender Deutsche Pfandbriefbank (+10.3%) lifted its 2019 pre-tax profit guidance to €205m-€215m following a strong third quarter. It had previously estimated pre-tax profit of €170m-€190m. Net income in the third quarter rose 43% to £70m, partly due to higher net income from realisations on the back of higher prepayment fees.

 

Lundin Petroleum’s (-6.6%) share price continued to decline after the Swedish oil and gas exploration issued third quarter results at the end of October. Although the headline numbers came in ahead of consensus forecasts, analysts highlighted individual disappointments across the group’s portfolio, particularly the Barents Sea well.

 

3i Group (-5.1%), the private equity and infrastructure investment company, recorded a 10% total return on opening shareholders’ funds during its interim period. Net asset value climbed to 873p per share from 815p at the end of March though this fell short analyst forecasts.

 

We opened a new position in British Airways owner International Consolidated Airlines Group, reflecting good cash flow screen scores and an attractive dividend yield.

 

Positive contributors to performance included:

Target Corp (+17.7%), GWA Group (+11.8%) and Amgen (+10.8%).

 

Negative contributors to performance included:

Lundin Petroleum (-6.6%), Charter Hall Group (-6.0%) and 3i Group (-5.1%).

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

 

 

Sep-19

Sep-18

Sep-17

Sep-16

Sep-15

Liontrust Global Income I Inc

3.2

6.3

10.4

25.8

-7.0

MSCI ACWI High Dividend Yield Index

10.7

8.3

10.8

33.7

-4.7

IA Global Equity Income

7.0

7.0

12.3

24.7

-2.7

Quartile

3

3

3

3

4

 

*Source: Financial Express, as at 30.11.2019, 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 30.09.2019, 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, December 12, 2019, 10:53 AM