Liontrust UK Growth Fund

December 2017 review

The Liontrust UK Growth Fund returned 3.1%* in December, compared with the 4.8% return from the FTSE All-Share Index.

 

UK equities reached fresh all-time highs as this year’s ‘Santa Rally’ a phenomenon where stocks surge towards the end of December as volumes thin took hold. The gains were mainly driven by large caps with the FTSE 100 Index rising 5.0%, compared to the FTSE 250’s 4.4% rise and the FTSE Small Cap’s 2.7% increase. The Fund’s relatively lower exposure to large cap stocks compared to the FTSE All-Share was therefore a headwind this month.

 

Also a headwind was that much of the FTSE All-Share’s rise was powered by mining stocks, a sector which the Fund has no holdings in. The avoidance of miners is based on the view that their values are derived from tangible assets, not the intangible assets which the Economic Advantage investment process seeks out. However, the Fund was able to capture some of gains experienced by the oil & gas sector, which tracked oil prices higher in December. BP (+6.9%) and Royal Dutch Shell ‘B shares’ (+5.0%) both contributed to the Fund’s return.

 

Oil services engineer John Wood Group (-10.2%) missed out on the rally of oil related stocks. The decline in the company’s share price came despite it announcing that the integration of Amec Foster Wheeler – which it acquired on 9 October 2017 – was progressing ahead of schedule and that it expects pro-forma 2017 earnings before interest, tax and amortisation (EBITA) will be between US$590m to US$610m.

 

Newsflow on holdings was light in December. British American Tobacco’s (+8.0%) shares appreciated as it indicated in a pre-close update that trading in the second half was in line with expectations and it anticipates another year of earnings growth. BAT added that the integration of Reynolds American is on track and currency translation is expected to provide a 5% tailwind for group full year earnings per share. Fund supermarket Hargreaves Lansdown (+12.5%) saw its share price increase towards the end of the month benefiting from the rise in wider equity markets.

 

Positive contributors included:

Next Fifteen Communications (+16.1%), Hargreaves Lansdown (+12.5%), WH Smith (+12.5%), Rightmove (+11.6%) and British American Tobacco (+8.0%).

 

Negative contributors included:

John Wood Group (-10.2%), Aggreko (-5.9%), Statpro Group (-4.7%), Spirax-Sarco Engineering (-2.5%) and Renishaw (-1.7%).

 

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


 

Dec-17

Dec-16

Dec-15

Dec-14

Dec-13

Liontrust UK Growth I Inc

14.2

18.1

9.6

1.8

19.8

FTSE All Share Index

13.1

16.8

1.0

1.2

20.8

IA UK All Companies

14.0

10.8

4.9

0.6

26.2

Quartile

2

1

2

2

4

 

 

*Source: Financial Express, as at 31.12.2017, total return (net of fees and income reinvested), bid-to-bid, institutional class.


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.

Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the GF UK Growth Fund may differ from the performance of the UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.

Disclaimer

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, January 11, 2018, 5:06 PM