Liontrust SF Absolute Growth Fund

Q2 2018 review

The Fund returned 8.9% over the quarter, outperforming the IA Flexible Investment sector average of 4.4%*.

From an asset allocation perspective, the portfolio continues to be heavily equity focused, with a low allocation to cash at just 3.6%. We upped the equity exposure in the last week of March after global equity markets sold off early in the year, and that has proved a successful strategy over the subsequent period.

While the news headlines were dominated by Trump’s attempts to spark trade wars with Europe and China, underlying business fundamentals for the areas of the global market in which we invest remain strong.

Important structural dynamics, such as the shift to a digital economy, the drive to improve efficiency and the importance of improving quality of life, also continue to drive earnings.

In terms of individual stock drivers, Kingspan was among the best performers over the quarter. The global leader in technology related to insulation panels and boards continues to deliver strong growth across the US and Europe and this is despite headwinds for overall construction markets coming from Brexit in the UK and weather issues in the US.

The importance of insulation as a means of cutting energy use in both commercial and residential construction, combined with Kingspan’s technological lead, underpin a business that continues to beat market expectations and can grow its business behind these two structural drivers.

US technology firm Intuit also enjoyed a strong second quarter. Intuit has two key products, both of which are market leaders. Quickbooks is undergoing a transformation as the offering moves from a subscription to a cloud- based model, ensuring the addressable market within small and medium businesses is expanding.

The firm’s turbo tax product is also experiencing super-normal growth, as it provides small businesses and individuals with software to help navigate the dreaded annual tax return. Both are simple, cost-effective products for small businesses and individuals.

The move to a cloud-based offering is also a key growth driver, as the lower monthly expense means more and more customers can access the products without large upfront costs. We have seen this type of situation in other industries, where the shift to cloud opens the addressable market significantly.

Among the weaker performers over the quarter was Prysmian. We like the company for its leadership position in connectivity, which includes highly technical deep sea projects, but problems at one of these projects in the UK, the Western Link project, resurfaced and drove a profit warning.

In the past, Prysmian’s management has been able to contain and resolve project issues after initial mistakes so we are confident it can do so again – but these can be costly prolonged problems so we are watching the situation closely.

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








Liontrust Sustainable Future
Absolute Growth 2 Acc






IA Flexible Investment












Source: Financial Express, as at 30.06.18, primary share class, total return, sterling, net of fees and income reinvested.

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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.


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, July 23, 2018, 10:02 AM