Liontrust Global Income Fund

November 2020 review

The Fund returned 20.2%* in sterling terms in November. The MSCI ACWI High Dividend Yield Index comparator benchmark returned 8.8% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was 10.7%.


Equity markets were in a state of euphoria in November. The causes of the bullish sentiment were the announcements of Covid-19 vaccine candidates which showed 90%+ efficacy and provided hope of a route out of the pandemic.


While a number of European countries entered new lockdowns in early November, Pfizer and BioNTech released successful late-stage trial results for their vaccine candidate, sparking a surge in stock prices. This was followed the very next week by Moderna reporting similarly effective results and throughout the rest of the month other vaccine candidates from around the world also provided promising updates.


In markets, a strong rally ensued in those stocks which had been amongst the hardest hit during the Covid-19 crisis. The best performing sector in the MSCI World Index was energy (+25%), clawing back some of the 47% year-to-date losses prior to November. Financials (+16%) and industrials (+12%) were the other big gainers. From a style perspective, the vaccine rally provided a major boost for value stocks, a trend we recently wrote about. The MSCI World Value Index returned 12% during the month, outperforming both the market and the MSCI World Growth Index’s 7.5% return.


The other major market development was Joe Biden’s victory in the US election. The contest was tighter than pre-election polls suggested and the touted “blue wave” failed to materialise, but ultimately the Democratic candidate won the required electoral college votes in a record turnout. Incumbent Donald Trump refused to concede and claimed, without evidence, wide-spread voter fraud. However, Trump’s accusations were largely ignored by investors who concentrated on the prospects of a Democrat leader in a post-pandemic world.


The US election result gave further impetus to value stocks, which was a boon to the Fund’s performance. The best performers in the Fund included stocks which were among the hardest hit by the pandemic, such as International Consolidate Airlines (+60%), Deutsche Pfandbriefbank (+59%) and Carnival (+56%).


International Consolidated Airlines Group and Carnival had seen much of their trading halted as a result of travel restrictions; the promise of a return to normality and a resumption of full trading caused a spike in both companies’ share prices. Carnival used the rally to issue US$1.5bn worth of equity, the proceeds of which will be used for “general corporate purposes”.


Deutsche Pfandbriefbank released third quarter results which showed a 7.1% pre-tax profit increase in Q3, partly driven by a rise in net interest and commission income. The company expects a “solid” fourth quarter operating result but remained cautious about the effect of the Covid-19 pandemic to real estate markets and withheld guidance. However, management stated that the business was well positioned to handle this uncertainty given its conservative risk strategy, good capital base and comfortable liquidity position.


Deutsche Pfandbriefbank was one of a number of financials holdings which performed strongly in the vaccine rally, others included Citigroup (+29%) and Bank of Ireland Group (+25%). Energy was another source of positive attribution, as oil prices surged 27% during November. BP (+28%), Lukoil (+23%) and Lundin Energy (+22%) were the highlights among the Fund’s holdings, and the improving oil price environment prior to November’s rally was apparent in Lukoil’s positive trading update. In Q3, the Russian company swung to a profit following two quarters of losses. It stated that weaker global economic activity had weighed on the company since the pandemic began, but an improved Exploration and Production performance in the third quarter – supported by higher oil prices – allowed it to register a 40% quarter-on-quarter rise in earnings before interest, taxes, depreciation and amortisation.


During the month, Rai Way and Genworth MI Canada were sold. Genworth was sold following the announcement from Brookfield Business Partners that it had entered into an arrangement agreement to buy the remaining outstanding shares in the company (already owns 57%) at a price of C$43.50 per share, a 22% premium to the previous day closing price. Following this news we exited the position. The holding in Rai Wai was also sold. The proceeds from these sales were invested across various other holdings in the Fund, including adding to recent purchases in Aggreko, Bank of Ireland, BP and Citigroup.


Positive contributors to performance included:

International Consolidate Airlines (+60%), Deutsche Pfandbriefbank (+59%) and Carnival (+56%).


Negative contributors to performance included:

Axfood (-5.0%), Genworth MI Canada (-1.0%) and Roche (-0.5%).


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 30 June 2020. Its distributions over the 12 months to 30 June 2020 – expressed relative to the Fund’s price on 30 June 2019 – give a 12 month yield of 4.7%. The MSCI World Index yield on the same basis was 2.3%.


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








Liontrust Global Income I Inc






MSCI ACWI High Dividend Yield Index






IA Global Equity Income













*Source: Financial Express, as at 30.11.20, 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 30.09.20, 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. 


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, December 18, 2020, 4:09 PM