Liontrust Global Income Fund

October 2020 review

The Fund returned -3.4%* in sterling terms in October. The MSCI ACWI High Dividend Yield Index comparator benchmark returned -3.0% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was -3.3%.


Global equity markets struggled in October, weighed down by resurgent Covid-19 fears and fading hope of a US fiscal stimulus package being announced ahead of November’s election. The month began in dramatic terms as Donald Trump confirmed he had tested positive for Covid-19. As he made a swift recovery, markets hoped that negotiations with Democrats regarding a new virus-relief stimulus package might receive fresh impetus, but no agreement was reached.


More broadly, the path of the pandemic caused growing concern in Western markets as evidence of a second wave of infections mounted. Many countries began reintroducing lockdown measures that had previously been relaxed. Estimates of the economic impact of Covid-19 continued to feed through; the IMF now expects a 4.4% global contraction in 2020, better than its June estimate of a 5.2% fall. One of the key factors in moderating the decline has been China’s recovery; it posted 4.9% year-on-year growth in Q3, taking its year-to-date growth into positive territory following Q1’s dramatic drop.


There were signs of a defensive tilt to developed market equity returns, with the utilities (+1.6%) and communications services (+0.9%) sectors of the MSCI World Index the only ones to generate a positive return in sterling terms. Energy (-5.5%) suffered another fall and is now down almost 50% this year, while IT (-5.4%) also performed poorly.


Within the Fund, the largest riser was Canadian mortgage insurer Genworth MI Canada (+28%). Its shares rose sharply on the news that majority shareholder Brookfield Business Partners was set to pay C$43.5 a share for the 33% of the company it doesn’t already own.


A number of stocks in the portfolio updated on Q3 trading. Danish jewellery retailer Pandora (+9.8%) issued an update in which it raised guidance for full year sales, albeit still forecasting a significant fall. It now expects a 2020 sales fall of between 14% and 17%, compared with its previous forecast of 14% to 20%. It also updated operating margin guidance to the top end of its previous range: from 16% - 19% to 17.5% - 19%. A better-than-expected sales performance in Q3, with organic sales falling 5%, was driven by 89% year-on-year growth in online sales.


Personal goods giant Kimberly-Clark (-10%) recorded a solid 3% increase in organic sales, although adverse currency effects knocked 2 percentage points off the rise. It has upgraded its full-year organic sales growth target to 5% (from 4% - 5%) and also increased its earnings per share guidance from US$7.40 - US$7.60 to US$7.50 – US$7.65. However, investors had been expecting larger upgrades to guidance and the shares slid as a result.


Swedish food retailer Axfood (+1.3%) saw increased consumption at home outweigh a fall in demand from restaurants, enabling it to record 5.5% growth in sales to SKr13.4bn and an 11% increase in operating profit to SKr796m, beating expectations.


Cruise ship operator Carnival (-15%) has been amongst the worst hit by travel restrictions during the pandemic, and shares in the company slipped further despite giving an update on its phased return to operations. Its Costa Cruises resumed voyages on two ships in September and Carnival expects to shortly resume voyages on additional Costa ships, as well as some AIDA ships. However, ship capacity will be reduced in order to satisfy health protocols. Carnival states that customer bookings in the first half of 2021 have been impacted but for the second half of the year they are at the higher end of the historical range for the capacity available (although at lower prices).


US pharmaceutical company Amgen (-15%) dropped after clinical trials on its Omecamtiv mecarbil treatment failed to provide evidence of a reduction in cardiovascular deaths.


A handful of further changes to the Fund’s portfolio of changes were implemented during October. Changes to the Fund’s portfolio reflect the results of the Cashflow Solution annual review process and are phased in order to minimise the impact on income distributions. Telenor, Telstra and Play Communications were sold from the portfolio while new positions were initiated in Aggreko, BP, Citigroup and Bank of Ireland.


Positive contributors to performance included:

Genworth MI Canada (+28%), Magna International (+12%), and Emira Property Fund (+10%).


Negative contributors to performance included:

Merlin Properties Socimi (-20%), Keller Group (-17%) and Carnival (-15%).


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 31.10.20, 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.


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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, November 11, 2020, 2:02 PM