Liontrust India Fund

Q3 2019 review

The Liontrust India Fund returned -5.6% in the third quarter of the year, against the MSCI India Index’s -2.0% return.

Market overview


Throughout the quarter Indian equities continued to exhibit considerable volatility, alongside most global markets, buffeted by external factors such as ongoing concern over the health of the global economy, a question further complicated by uncertainty created by the US-China trade dispute, protest movement in Hong Kong and Brexit amongst other specific issues. Moreover, India was also driven by internal factors in the aftermath of the emphatic re-election of Narendra Modi’s BJP party in May of this year. Specifically, the end of the quarter saw an unexpected and much welcomed corporate tax cut – the tax rate for domestic companies was reduced from 30% to 22%, with an additional rate of 15% for new domestic manufacturing companies intended to incentive a revival of the domestic capex cycle. The move indicated a commitment from the government to support growth, with 70% of corporates set to benefit, and companies across the board seeing an immediate 5-10% boost to earnings.


Notwithstanding the boost from the aforementioned tax cut, the Indian market continued to trade with a defensive tone throughout the third quarter, with an economic slowdown led by the auto sector only partially offset by reduced interest rates and fiscal efforts to boost growth. Consumer staples were by far the best performing sector in this environment, whilst financials continued to prove the most vulnerable sector (and therefore recorded the weakest returns), dogged by continuing asset quality concerns as growth continues to deteriorate at the margin.


Portfolio attribution


The Liontrust India Fund remains oriented towards the ultimate recovery of the domestic economy and geared towards the mid-cap sector that stands to benefit from this outlook. The most significant driver of this quarterly underperformance was the Fund’s overweight positioning in the industrials and financials sectors, which were hit hardest by the macro uncertainty prevailing in the short term. Moreover, the underweight position in consumer staples – which we regard as over owned and overvalued on the whole – cost performance given the very strong returns from that sector in the risk-off market conditions.




The Fund remains focused on our long-term positive view of the prospects for an economic recovery in India, supported by government policy and ultimate resumption of domestic capital spending, and also on the country’s mid-size companies that are most directly geared into this positive outlook. The Fund has experienced very low turnover and there were no significant changes to the portfolio over this quarter.  


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








Liontrust India C Acc






MSCI India Index







*Source: Morningstar as at 30.09.2019, on 17.10.2019.

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 Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.




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.

Tuesday, October 22, 2019, 3:45 PM