Liontrust India Fund

Q4 2020 review

Over the fourth quarter, the Liontrust India Fund returned 14.4%, versus the MSCI India Index’s 14.5% gain*.


The final quarter of 2020 saw Indian equities continue the strong upsurge from the March lows, driven by rapidly improving sentiment both at home and abroad. Since March, social mobility has increased steadily within India, synchronised with similar developments across the world, reflecting an improving economic picture and gradual return towards normality, and in turn driving a rapid improvement in corporate earnings across the board. Moreover, the arrival of several vaccines in the final months of the year has accelerated the potential recovery timeline, further supporting market sentiment. In the fourth quarter the MSCI India benchmark returned an impressive 20.4% in US Dollars (14.5% in Sterling terms), generally in line with wider emerging markets, but comfortably ahead of Developed Markets (+7.8%). For the year as a whole, India finished in positive territory (+12.0%), one of only four emerging markets to do so.  

In economic terms, by the end of the year most activities had largely returned to normal. With September quarter results showing 75% of companies upgrading their earnings outlooks, a nearly unheard-of percentage. In particular, the property market has recovered firmly, with transaction volumes rising rapidly with record affordability meeting pent-up demand. The recovery in the equity market has been broad, across most sectors. Given this backdrop, there was an unsurprisingly cyclical bias to returns, with financials, materials and industrials leading the charge, whilst more defensive sectors such as healthcare and consumer staples underperformed. All sectors posted positive returns with the exception of energy, where heavyweight Reliance Industries lagged the wider market after having performed extremely well earlier in the year whilst markets were much more volatile.

The biggest source of outperformance for the Fund was the overweight allocation to the market-leading financials sector, in particular the Banks subsector. The Fund has a large weighting of over 9% to large-cap private lender ICICI Bank, which performed very strongly in the quarter, along with peers HDFC Bank and Axis Bank – all of which supported by improvements in the lending environment and stabilisation in asset quality due to broad-based economic recovery. Further, good performance came from the overweight allocation to industrials – especially infrastructure operator Larsen & Toubro – which performed well during this recovery phase from low valuations, and also from stock selection in the IT sector, where holdings in mid-cap players Cyient and Persistent Systems outperformed the wider sector by closing valuation discounts that had grown to wide levels earlier in the year. Offsetting these outperformers, the Fund suffered from a large underweight position in the consumer discretionary sector, where auto stocks in particular rallied hard.

We believe the outlook for India – as well as for wider emerging markets – remains very attractive given relative valuations to developed markets and a broad global recovery underway supporting rapid positive earnings revisions. In India, we argue that in particular the domestic property market revival is key to underpinning a consumer revival and also in turn spurring a domestic investment cycle that has been notably absent for many years now. We consequently added a position in Godrej Properties in the quarter in order to increase our exposure to this reality. Otherwise, the Fund remains positively oriented to the ongoing recovery, and has indeed performed very strongly during the second half of the year as conditions have normalised after the disruptions of the first 6 months due to the global pandemic.

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







Liontrust India C Acc GBP






MSCI India







*Source: FE Analytics as at 31.12.20


**Source: FE Analytics as at 31.12.20


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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.


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.


Monday, January 25, 2021, 3:54 PM