Liontrust UK Growth Fund

December 2020 review

The Liontrust UK Growth Fund returned 1.7%* in December. The FTSE All-Share Index comparator benchmark returned 3.9% and the average return in the IA UK All Companies sector, also a comparator benchmark, was 4.5%.

 

December was bookended by UK approvals for Covid-19 vaccines: first the Pfizer/BioNTech vaccine on the 2nd, followed by the Oxford/AstraZeneca version on the 30th.

 

Positive sentiment over the roll-out of vaccines in 2021 and a return to economic and societal normality allowed markets to add to November’s sharp gains, despite the emergence of a new strain of coronavirus which was spreading rapidly in the UK – leading to lockdown measures being tightened at Christmas rather than relaxed as planned.

 

The mood among UK investors may also have been boosted by the last-minute agreement of a trade deal between the UK and EU ahead of the transition period ending on 31 December. Whatever the merits (or otherwise) of the deal, the removal of some uncertainty will have been welcomed by most.

 

While AstraZeneca’s (-6.2%) name was in the headlines for good reasons due to UK approval of its vaccine for emergency supply, shares in the company had slipped earlier in the month on news of a large deal to acquire Alexion Pharmaceuticals. The US$39bn cash-and-shares acquisition will grow AstraZeneca’s immunology business by adding Alexion’s portfolio of treatments for rare diseases.

 

The portfolio’s top gainer was Weir Group (+19%). During the month it announced a £95m order to supply aftermarket components and services to a mine in Western Australia. The company also confirmed that the US$405m sale of its oil & gas division to Caterpillar is expected to complete in Q1 2021 rather than during 2020. Following the sale, Weir Group will be focused on providing highly engineered technology to the mining industry.

 

Health and environmental technology group Halma (+11%) was active in managing its portfolio of businesses in December. The mini-conglomerate announced the sale of fiber optics manufacturer Fiberguide for US$38m and the acquisition of Static Systems for £37m. Static Systems designs, manufactures and installs of critical communication systems used in UK healthcare trusts' patient care infrastructure.

 

Sage Group (-3.8%) also undertook some reorganisation. In its full year results announcement in November, the accounting software company announced that certain international units were being earmarked for sale. In December it agreed the c.£66m sale of its Polish business and the c.£95m disposal of the Asia and Australasia unit.

 

Among the portfolio’s detractors, RWS Holdings (-4.8%) released full-year results for the period to 30 September 2020. The results give no cause for concern, however. In fact, the company commented that the new financial year has started well and is slightly ahead of its expectations.

 

Positive contributors included:

Weir Group (+19%), TP ICAP (+12%), Aggreko (+12%), Paypoint (+11%) and TI Fluid Systems (+11%)

 

Negative contributors included:

Petrofac (-9.9%), AstraZeneca (-6.2%), RWS Holdings (-4.8%), Unilever (-3.9%) and Sage Group (-3.8%).

 

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

 

 

Dec-20

Dec-19

Dec-18

Dec-17

Dec-16

Liontrust UK Growth I Inc

-8.3

19.9

-6.1

14.2

18.1

FTSE All Share

-9.8

19.2

-9.5

13.1

16.8

IA UK All Companies

-6.0

22.2

-11.2

14.0

10.8

Quartile

3

3

1

2

1

 

*Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.

 

**Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, primary class.

 

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. 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

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, January 14, 2021, 5:41 PM