Liontrust India Fund

Q3 2020 review

Over the third quarter, the Liontrust India Fund returned 15.6%, versus the MSCI India Index’s 9.9% gain*.


During the third quarter, global markets continued their recovery from the low point of March when fears over the Covid-19 pandemic where at their worst. Although the virus continues to spread both worldwide and within India, markets have in general been appeased by a combination of virus containment strategies, hopes of a vaccine, alongside extremely easy monetary and fiscal policy. The quarter was a good one for emerging markets in general, but especially for India, which appreciated 15% in dollar terms – compared with 8.7% for MSCI Emerging Markets and 7.5% for MSCI World. Although the number of virus infections remains elevated in India, mortality rates remain relatively low, which in turn has allowed a relaxing of lockdowns, which now are very much on a localised basis. In the third quarter, electricity consumption jumped 80%, reflecting a normalisation in demand levels within the economy. Although there have been hurdles to deal with in terms of ongoing border disputes with China and more recently a pickup in inflation that threatens to limit the scope of monetary policy response to lower growth, the monsoon has delivered excess rainfall for two consecutive years, which has been supportive of rural spending and markets have continued to perform well.

Given the pickup in utilisation rates across both the demand and supply sides of the economy, it was the more cyclical sectors that fared best – with consumer discretionary, energy and materials stocks performing well. With index heavyweight Reliance Industries enjoying further outperformance as the retail business continues to prosper and attract investment from global players keen to access the lucrative domestic market. However, the best-performing sector was IT, to an extent riding on the coat tails of the global tech rally and digitisation theme, but also supported by strong corporate guidance from the major players, attractive relative valuations and cash-rich balance sheets. At the other end of the spectrum, the underperforming sectors were those more defensive areas of the market such at telecoms, utilities and consumer staples, where a combination of low gearing into the recovery, higher valuations and high prior ownership weighed on performance.

The robust performance was driven primarily by strong stock selection in both IT and materials. The Fund is mildly overweight IT and therefore benefited from a positive allocation effect from what was the top-performing sector. But the significant position in mid-cap Persistent Systems did especially well, effectively doubling over the quarter. Smaller companies in the sector have done especially well given the excessive discount to the sector leaders that had developed earlier in the year, which has converged during the recovery phase. In materials, the Fund’s holding in off-benchmark companies such as Deepak Nitrite, Navin Fluorine and Sudarshan Chemical performed strongly due to both the cyclical recovery in global demand, but also ongoing robust pricing in specific chemical markets as China rationalises production. On the offsetting side the Fund’s underweight position in consumer discretionary was something of a drag, and the unavoidable underweight position in Reliance Industries – the Fund has a maximum 10% position in the stock against a 15% weight in the market despite our preference for the company – which cost the Fund in terms of performance. The Fund made no major changes over the quarter.

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







Liontrust India C Acc GBP






MSCI India







*Source: FE Analytics as at 30.09.20


**Source: FE Analytics as at 30.09.20


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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 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.


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Wednesday, October 21, 2020, 8:59 AM