Liontrust SF Managed Fund

Q3 2018 review

The fund returned 4.4% over the quarter, outperforming the IA Mixed Investment 40-85% Shares sector average of 1.4%*.

This comes against a backdrop of ongoing geopolitical uncertainty: on the trade war front, the US continues to swap barbs with China and the deal struck to overhaul NAFTA (the North American Free Trade Agreement) did little to ease things.

In terms of asset allocation, we reduced our overweight position to global equities to neutral in the last week of the quarter and used these proceeds to increase our overweight in credit.

While we believe economic fundamentals are currently supportive for risk assets, we see risks building over the next six to 12 months. A US-led trade war, combined with rising interest rates across the globe, could dampen economic growth and in this scenario we prefer credit over equities. We remain underweight cash and government bonds, as we see both as currently offering poor returns to investors.   

We continue to stress, however, that while trade war issues dominate the news, 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.

From a thematic perspective, our two healthcare-focused themes, Providing affordable healthcare globally and Enabling innovation in healthcare have been key drivers, with companies we have selected delivering strong performance across the board.

In terms of individual stocks, IQVIA has remained among the stronger performers over the period. The US healthcare company has merged its clinical trial outsourcing business with its data gathering operation, which analyses information about how patients in the US purchase and fill prescriptions.

It is building a technology platform from these two information sources to help drug companies design better clinical trials, ensuring efficiency as the system improves. The US spends 18% of its GDP on healthcare and with an aging population, efficiency and affordability are key themes.

Perkin Elmer also performed well over the quarter. Its business model aims to capitalise on improving innovation in healthcare, as well as the growing availability of important diagnostic treatments such as infant blood screening, in China and the emerging markets.

The management team at Perkin Elmer decided to divest its lower growth businesses over the last few years and focus on areas such as environmental testing equipment for air quality, and its global leading blood screening business. The business is now delivering double-digit organic revenue growth and improving margins, driven by the structural change in industrial and healthcare end markets.

Kyudenko, meanwhile, was a poor performer over the period. Over the quarter, the company experienced some delays in booking payments for its mega solar projects, which resulted in weaker than expected earnings numbers.

This appears temporary in nature however and we expect strong earnings over the rest of the year, as Japan continues to shift away from nuclear power and grow wind and solar in the energy mix.  

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








Liontrust Sustainable Future Managed 2 Inc






IA Mixed Investment 40-85% Shares












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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 majority of the Liontrust Sustainable Future Funds have holdings which are denominated in currencies other than Sterling and may be affected by movements in exchange rates. Some of these funds invest in emerging markets which may involve a higher element of risk due to less well regulated markets and political and economic instability. Consequently the value of an investment may rise or fall in line with the exchange rates. Liontrust UK Ethical Fund, Liontrust SF European Growth Fund and Liontrust SF UK Growth Fund invest geographically in a narrow range and has a concentrated portfolio of securities, there is an increased risk of volatility which may result in frequent rises and falls in the Fund’s share price. Liontrust SF Managed Fund, Liontrust SF Corporate Bond Fund, Liontrust SF Cautious Managed Fund, Liontrust SF Defensive Managed Fund and Liontrust Monthly Income Bond Fund invest in bonds and other fixed-interest securities - fluctuations in interest rates are likely to affect the value of these financial instruments. If long-term interest rates rise, the value of your shares is likely to fall. If you need to access your money quickly it is possible that, in difficult market conditions, it could be hard to sell holdings in corporate bond funds. This is because there is low trading activity in the markets for many of the bonds held by these funds. Mentioned above five funds can also invest in derivatives. Derivatives are used to protect against currencies, credit and interests rates move or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions.


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.

Thursday, October 25, 2018, 1:29 PM