Liontrust European Growth Fund November 2021 review | Insights

Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

The Fund returned -3.5%* in sterling terms in November. The MSCI Europe ex-UK index comparator benchmark returned -1.7% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was -1.7%.

For most of the month, investors continued to focus on when growing inflationary forces would prompt central bank action. While the Bank of England surprised by declining to raise interest rates at its November meeting, the US Federal Reserve confirmed it would immediately start scaling back its $120bn a month bond-buying programme. With US consumer price inflation for October later revealed to be running at 6.2%, the fastest annual pace since 1990, the re-nominated Fed Chair Jay Powell commented that it was time to retire the term “transitory” as a description of current price pressures.

But events in the final week or so were the most decisive in terms of market direction, with news of a new Covid-19 variant pushing global equity markets sharply lower. As European markets slid, only two sectors of the MSCI Europe ex-UK Index stayed in positive territory in sterling terms: communication services (+1.6%) and materials (+0.8%). Energy (-5.8%) and finance (-4.3%) were the weakest sectors.

Although Simcorp (-14%) maintained its full-year financial guidance, its shares slipped on Q3 numbers that were moderately behind consensus estimates. Revenues rose 7.1% year-on-year to €107m, behind analyst forecasts of €107m. The company says operating profit margins are set for a larger-than-expected boost from subscription renewals and conversions. However, it cautions that the sales process continues to be adversely affected by Covid-19 restrictions on travel, resulting in postponed sales and longer timelines.

Q3 results from Norwegian shipping and logistics giant AP Moller-Maersk (+7.2%) showed the extent to which it is benefiting from global supply chain problems currently. Higher freight rates drove revenues up to $16.6bn, a 68% year-on-year rise. The benign operating environment allowed for a trebling of EBITDA (earnings before interest, tax, depreciation and amortisation) to $6.6bn.

However, higher freight rates are contributing to cost worries at Danish drinks company Royal Unibrew (-12%). Q3 organic volume growth slipped to 4% in Q3, down from 13% in the first half of the year. While the company is sticking with its 2021 forecasts, its outlook for 2022 will have caused some investor concern. Significant rises for raw material prices and freight costs mean that next year could prove “very demanding”, as its cost hedging measures expire.

Positive contributors to performance included:

ABB (+7.7%), AP Moller-Maersk (+7.2%) and Moncler (+4.0%).

Negative contributors to performance included:

Simcorp (-14%), Royal Unibrew (-12%) and Stellantis (-12%).

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

	Sep-21	Sep-20	Sep-19	Sep-18	Sep-17
Liontrust European Growth I Inc	42.8%	3.5%	-3.0%	6.8%	16.7%
MSCI Europe ex UK	20.9%	-0.5%	5.8%	1.3%	21.4%
IA Europe Excluding UK	22.4%	3.1%	2.2%	1.9%	21.9%
Quartile	1	2	4	1	4

*Source: Financial Express, as at 30.11.21, 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 30.09.21, total return (net of fees and income reinvested), bid-to-bid, primary class.

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Key Risks

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. 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 Funds managed by the Cashflow Solution team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. Some of the Funds may invest in derivatives. The use of derivatives may create leverage or gearing. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead. Some of the funds may hold a concentrated portfolio of stocks. If the price of one of these stocks should move significantly, this may have a notable effect on the value of the respective portfolio.

Disclaimer

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.

This 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. The investment being promoted is for units in a fund, not directly in the underlying assets. 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, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.