Liontrust Macro UK Growth Fund

April 2018 review

The Liontrust Macro UK Growth Fund returned 6.2%* in April, compared with the FTSE All Share Index return of 6.4%.

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 only modestly behind 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.

Returns were enhanced by a very strong month for 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. Notable contributions were also made by travel agency On the Beach and online estate agency Purple Bricks as UK investors renewed their appetite for growth stocks.

Further assistance came from the telco constituents of our Data Growth theme. Bucking year-to-date weakness, the combination of forthcoming full year numbers and modest ratings were sufficient to drive BT and Vodafone materially higher.

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 9% 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 UK Growth Fund April 2018 review

Macro-Theme Changes(1): 
Population Ageing
Following its addition last month, we increased the position in St James Place. The twin forces of population ageing and the ‘advice gap’ should drive structural growth. Long-gestation pension earnings smooth its equity market-gearing while historically-modest valuation belies strong flows. This move was funded through a decrease in the Fund’s position in Aviva, which is facing difficulties in its overseas divisions. 

Global Pharma
Following the poorly structured bid from Takeda (too much stock and not enough cash) and obvious lack of counterbidder we reduced exposure to Shire. 

Digital Economy
A new position was opened in Paddy Power. The shares’ de-rating from 2016 highs offered a buying opportunity and the company’s earnings growth is driven by strong digital offering. Gaming exposure offers benefits of portfolio diversification;

The holding in DS Smith was increased. Its Q3 trading statement documents strong operating backdrop in e-commerce. International Paper’s bid for Smurfit Kappa also provides evidence of a sector ‘in play’.
Discrete years' performance* (%), to previous quarter-end:







Liontrust Macro UK Growth I Acc






FTSE All Share Index






IA UK All Companies












 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.

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, 3:15 PM