Liontrust Macro UK Growth Fund

February 2018 review

The Liontrust Macro UK Growth Fund returned 2.9%* in February, compared with the FTSE All Share Index return of -3.3%.

February pivoted on the key early month US payrolls release. Critically, a solid jobs number was accompanied by confirmation of accelerating earnings growth. Average Hourly Earnings printed ahead of consensus estimates at 2.9%, pushing the three month average to the highest level since ’08.


The hint of inflation was enough to dictate the direction of February market movements. Treasury and Gilt yields reached fresh cycle highs as the correction in sovereign debt markets gathered pace. Companies with bond-proxy characteristics were hit as investors reconsidered their merits in the midst of rising rates.


This was to the Fund’s advantage in February. The absence of tobacco (-10.2%), personal goods (-5.4%) and utilities (-6.5%), all on thematic grounds, ensured the Fund avoided these equity income pitfalls. The Fund was not wholly immune, however, with weakness seen amongst the telecoms constituents of the Data Growth theme.


Obversely, the Fund’s weighting to rate-sensitive life insurers gave the portfolio a partial peg to February’s yield moves. Although the sector fell on the month, declines failed to keep pace with the benchmark – generating some small measure of alpha. It’s likely that the sector’s March spate of full year updates contributed, in giving some a reason to pause.

From a single stock perspective, the portfolio’s conspicuous gainers included online travel business On the Beach. The company’s near 11% move higher issued from a strong AGM trading update, which revealed an impressive 23% increase in year-to-date post-marketing revenue growth. The company is growing, cash-generative and looks cheap relative to the peer group.

Jupiter Fund Management detracted from portfolio returns, falling c.13.5% over February. The drop reflected a combination of February’s broad market weakness and a full year statement wherein much of the good news (net flow data, assets under management) had been preannounced; bears focusing myopically on a 2bps decline in net management fee margin to 85bps from 87bps.


Macro-Theme Allocations:


Macro-Theme Changes[1]:


Digital Economy was sold. A full year statement disclosed sub-market revenue growth and guided for a similar outcome in 2018 while the company’s remedial strategy carries both uncertainty and the prospect of a higher investment spend.

Rising Rates

We increased the position in BAE Systems, taking advantage of a share price correction following muted full-year guidance. The shares trade at a discount to US peers while its final salary pension deficit offers gearing to higher rates.

The holding in IFG Group was exited. The mooted sale of the Saunderson House wealth management business detracts from the investment case.

Dollar Earners

The Macro-Theme was closed through the sale of the position in Micro Focus. The company has a growing record of operational disappointment while the HPE acquisition carries substantial execution risk.


Infrastructure Spending

We completed the sale of Telford Homes. Its outlook is compromised by a reliance on foreign investment demand in the midst of a soft London property market. The thematic attractions of its growing Build to Rent business are offset by margin dilution.


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








Liontrust Macro UK Growth I Acc






FTSE All Share Index






IA UK All Companies














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

*Source: Financial Express, as at 28.02.2018, total return (net of fees and income reinvested), bid-to-bid, institutional class.

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 Funds managed by the Macro Thematic team 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. The performance of the Liontrust GF Macro Equity Income Fund may differ from the performance of the Liontrust Macro Equity Income Fund and is likely to be lower than its corresponding Master Fund due to additional fees and expenses.


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.

Monday, March 12, 2018, 5:06 PM