Liontrust Macro UK Growth Fund

December 2019 review

The Liontrust Macro UK Growth Fund returned 3.9%* in November, compared with the FTSE All Share Index return of 3.3% and the 3.8% average return of funds in the IA UK All Companies sector.


As much as November returns were dictated by stock-specifics, December’s performance was largely determined by the long-anticipated pivot of the UK election.


Rich with implication, the election offered settlement in respect of questions regarding the future shape and character of the UK economy and the form of the UK’s relations with Europe. The unexpected size of the Conservative majority delivered an emphatic answer on both counts and bestowed investors with a degree of certainty that had been lacking in the political tumult of the last three and a half years.


This proved enough to trigger a material rally in UK equities, with the FTSE 100 (+2.8%) outpacing foreign benchmark indices. With good reason, however, the true import of the election result wasn’t felt amongst the multi-nationals of the FTSE 100, but registered more emphatically amongst the swathes of UK-centric businesses that populate the FTSE 250 (+5.4%) and Small-Cap indices (+6.1%); a point writ large by the comparative strength of the FTSE Local index (+4.6%).


In broad terms, this division also tracked the fault-line between growth and value style equities. Businesses with growth characteristics underperformed, whilst mature, or cyclical value style businesses were coveted; the clarity offered by the election served to entice investors back to companies with more direct gearing to the economic cycle.


Given the abundant valuation opportunities presented by three years of UK political uncertainty, this was an outcome for which the portfolio had been patiently positioned. The Fund’s spread of UK housebuilders, building materials businesses and financials performed strongly, as political certainty refreshed investor appetite for value-rated companies with explicit UK exposure. Our overweight positioning to such industries proved a key driver of December outperformance.


The banks and life insurers of our Rising Rates and Population Ageing themes offered a more qualified contribution to December returns. In view of the intimate connection between such businesses and the underlying economy, it was understandable that share prices would react positively to a definitive election result; theme bellwethers like Lloyds (+2.2%) and Legal & General (+7.9%) spiked more than 12% in the immediate aftermath. Disappointingly, however, gains were partly effaced over the remainder of December and the portfolio’s margin of outperformance narrowed. Undoubtedly, this corresponded to currency movements, with the pound’s gyrations serving as shorthand for investor sentiment towards sterling-denominated assets. Further, many UK-centric cyclicals – banks and life insurers inclusive – had already enjoyed sizable rallies from their late summer lows. From this vantage, late December drift seems little more than an example of the old market cliché that its always better to travel than arrive.


A second and modest offset to Fund returns was the comparative weakness of portfolio companies with significant, non-sterling earnings. Understandably, this followed December’s sterling strength and improved sentiment towards UK assets. This affected the Fund’s miners, oils and mobile telecom holdings. However, these remain cheaply-rated businesses, with attractive investment cases and we expect the effect to be short-lived.

Macro-Theme Allocation (as at 31.12.19):


Liontrust Macro UK Growth Theme Allocation

Source: Liontrust


Macro-Theme Changes [1]:


Global Pharma

With little utility to the broader portfolio, the rump positions in Abbvie and Eli Lilly were sold. The sale of US dollar-denominated holdings enacts our bullish sterling outlook.

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








Liontrust Macro UK Growth I Acc






FTSE All Share






IA UK All Companies













*Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested), bid-to-bid, institutional class.

**Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested), bid-to-bid, primary class.

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

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. 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.


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 13, 2020, 5:00 PM