Liontrust Macro Equity Income Fund

April 2018 review

The Liontrust Macro Equity Income Fund returned 6.6%* in April, compared with the 6.4% return from the FTSE All Share Index.

Performance was driven by the Fund’s bias to large-cap equities; the FTSE 100 outstripping both UK mid- and small-caps, in returning 6.8% for April.

That the portfolio finished modestly ahead of the index should be judged in terms of the Fund’s zero weighting to April’s best performing sectors: food & drug retailers (+14.5%) and oil & gas (+13.3%). Food retailers rallied on Tesco’s strong full year numbers and breaking news of a Sainsbury/Asda tie-up, but the latter is most telling in its insinuation of Amazon’s growing and relentless threat to the space. Large-cap oil and gas names BP and Royal Dutch Shell traded higher in lock-step with the price of crude. Needless to say, such moves seem little more than noise when viewed in terms of the structural headwind presented by electric vehicles.

The tobacco sector (-1.1%) was an instance of a zero weighting that delivered a fillip to relative performance. April weakness followed quarterly earnings from US tobacco giant Philip Morris, which disclosed a disappointing showing in smokeless, cigarette alternatives. Such incremental evidence offers proof of our bear thesis and gives good reason to stay zero-weighted.

April returns were augmented by a strong showing from the portfolio’s telecoms holdings. Populating our Data Growth theme, the telecoms exposure has been a drag on Fund performance in the last twelve months. But it seems the combination of forthcoming full year numbers and undemanding valuations were sufficient to drive BT and Vodafone materially higher. This effect was partially checked by a negative reaction to AT&T’s largely non-descript Q1 earnings.

Performance was assisted by the paper and packaging constituents of our Digital Economy theme. DS Smith rallied on a pleasing Q3 statement that reported volume growth ahead of trend and attested to the growing dominance of e-commerce. It seems clear this stoked investor demand for bid stock and fellow portfolio constituent Smurfit Kappa, which also made gains.

April also saw a resurgent US dollar, with the Dollar Spot Index appreciating over 2%. This move likely issued from the oil-driven pick-up in inflation expectation and the upwards pressure exerted on nominal Treasury yields; the US 10-year yielding more than 3%, if only briefly, for the first time since 2014. This was a boon to performance given the Fund’s 10%+ allocation to US equities, with pharmaceutical Merck leading the pack on strong clinical data for its Keytruda cancer drug.

In caveat, US dollar gains vis-a-vis Sterling also reflected Bank of England Governor Mark Carney’s efforts to dial back market expectations of a May rate hike on the pretext of “mixed” UK data. We note April’s insipid retail sales and business survey data, but view the UK’s strong employment market and incipient wage inflation as a more accurate guide to the UK’s economic health. As such, we remain confident that UK policy and market rates will rise and believe the rate-sensitive companies of our Rising Rates theme are an excellent way to play this trend.  

Macro-Theme Allocation (as at 30.04.18):

Liontrust Macro Equity Income Fund April 2018 review

Macro-Theme Changes(1):
Population Ageing

We recalibrated the Fund’s life insurance exposure by increasing Prudential plc while trimming Aviva. The de-merger of Prudential’s UK business offers mechanism to capture sum-of-the-parts value while a strong Asian presence drives earnings growth. By contrast, Aviva faces difficulties in its overseas operations. 

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







Liontrust Macro Equity Income I Acc






FTSE All Share Index






IA UK Equity Income












The omission of a Macro-Theme expresses the absence of notable portfolio activity.

*Source: Financial Express, as at 30.04.2018, total return (net of fees and income reinvested), bid-to-bid, institutional class. 

This review has been prepared for the Liontrust Macro Equity Income Fund but is also representative of the Liontrust GF Macro Equity Income (the Feeder Fund). The performance of the Liontrust GF Macro Equity Income Fund may differ from the performance of the Liontrust Macro Equity Income Fund (the Master Fund) and will typically be lower due to additional fees and expenses.

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. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.

Investment in the Fund involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Fund’s expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation.


This content 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. Examples of stocks are provided for general information only to demonstrate our investment philosophy.  It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, faxed, reproduced, divulged or distributed, in whole or in part, without the express written consent of Liontrust. 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.

Thursday, May 17, 2018, 3:04 PM