Liontrust Russia Fund

Q4 2019 review

The Liontrust Russia Fund returned 5.2%* over the fourth quarter of 2019, compared to a 6.0% gain from the MSCI Russia 10-40 index.

Market Overview

Global markets enjoyed a positive end to 2019. Returns were underpinned by the US and China reaching a phase one trade deal, the US, Canada and Mexico agreeing on the USMCA trade agreement, accommodative monetary policy, better than expected earnings, and emerging green shoots from manufacturing PMI data. Crude oil increased steadily during the quarter, rising 8.6% to finish at $66 a barrel.

Against this backdrop Russian equities had a strong quarter, rising by 6.0% and outperforming emerging markets’ return of 4.0%. Inflation continued to decline reaching 3% in December, below the Central Bank’s 4% target. Receding inflationary pressures allowed the Central Bank to cuts rates by a further 75bps during the quarter to 6.25%. The Liontrust Russia Fund returned 5.2% for the quarter, with strong stock level gains in Norilsk Nickel, Yandex and Surgutneftegas. The performance of these holdings was offset by weakness in Ros Agro and X5.

Outlook

The Russian benchmarks continue to be heavily weighted in the energy sector, with many sectors of the Russian economy underrepresented or not represented at all. The Liontrust Russia Fund continues to offer diversified exposure in sectors that are not present in the benchmark, such as the IT and industrials sectors.

 

Despite the recent outperformance of the Russian market against broader emerging markets, Russia is still trading at a more than 50% discount to emerging markets, near the lowest levels seen in the past ten years and only marginally higher than at the peak of the crisis in late 2014.

 

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

 

 

Dec-19

Dec-18

Dec-17

Dec-16

Dec-15

Liontrust Russia C Acc GBP

32.7

6.2

5.3

72.7

12.0

MSCI Russia 10/40 (NR)

37.4

5.2

-8.0

83.2

13.4

IA Specialist

13.1

-5.1

9.7

26.2

-5.7

 

*Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)

 

**Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)


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 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.

Disclaimer

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.

Friday, January 24, 2020, 10:35 AM