The Liontrust Balanced Fund returned 2.4% over the quarter, outperforming its average peer in the IA Mixed Investment 40-85% Sector, which returned 1.7%*.
The Liontrust Global Equities team has taken on the management of the fund. The team is headed by Mark Hawtin, who joined Liontrust in May from GAM Investments, where he was Investment Director and was Head of Global Equities.
Global equity markets continued their positive trajectory during the second quarter as the enthusiasm for the AI theme and the narrow cohort of mega-cap companies drove indices higher. Toward the end of the quarter, macroeconomic and geopolitical developments started to influence proceedings, with elections and central bank interest rate policy coming back into the spotlight. There was also evidence emerging that consumers around the world are coming under increasing pressure, as several consumer-related companies reported a weakening in demand.
Positive stock attribution
The most significant contributor to performance over the second quarter was Nvidia, the global chipmaker specialising in the parallel processing chips and software solutions that sit at the heart of AI. Nvidia continues to benefit from the bullish sentiment around AI, and the elevated spending of the big technology companies eager to build out their capabilities in this field.
The second strongest contributor to returns was Alphabet, the parent of technology giant Google, which did well after reporting healthy growth in both its core search and cloud infrastructure divisions.
Negative stock attribution
The stock that weighed the most on performance in the second quarter was Global Payments, the provider of electronic transaction processing services. Its shares slipped after the company warned of a more subdued economic environment, which is impacting consumer spending volumes.
Workday, the HR software company, was another stock that weighed on performance. The company fell after lowering guidance for subscription revenue growth as customers start to scrutinise spending and start to factor in headcount reductions, which is a key variable for the company as it charges customers on a per employee basis.
Outlook
Markets have continued to grind higher as the path of least resistance remains up. Equity investment flows remain geared to the passive flows and to the mega-cap names making the rally increasingly narrow. With this in mind, we believe that risks have increased significantly for this very narrow part of the market. We see two possible outcomes for the second half of the year, both of which would likely see mega-caps underperform. The first would be a retained Goldilocks scenario with interest rates starting to decline, inflation remaining in check, economies softening slightly but growth remaining – in this scenario, markets might well continue to move higher but like 2023, with a much broader participation. The second is that the landing is a lot bumpier than feared and that leads to a growth slow-down not only at the macro level but also at the corporate level. This could lead to a significant pull back later in the year. We weight each of these outcomes equally and so we believe positioning should be for a broader participation whether that be as markets continue to grind higher, or because they pull back and the passive flows drive underperformance in the crowded, large cap names. There is a lot of value below the surface in markets and this will likely surface as either scenario plays out.
Discrete years' performance (%) to previous quarter-end:
|
|
Jun-24 |
Jun-23 |
Jun-22 |
Jun-21 |
Jun-20 |
|
Liontrust Balanced C Acc |
17.0% |
8.1% |
-11.8% |
16.3% |
15.5% |
|
IA Mixed Investment 40-85% Shares |
11.8% |
3.3% |
-7.2% |
17.3% |
-0.1% |
|
Quartile |
1 |
1 |
4 |
3 |
1 |
*Source: FE Analytics, as at 30.06.24, total return, net of fees and income reinvested
** Source: FE Analytics, as at 30.06.24, primary share class, total return, net of fees and income reinvested
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.
The Fund may encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings. The Fund may invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing. Outside of normal conditions, the Fund may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash. Counterparty Risk: any derivative contract, including FX hedging, may be at risk if the counterparty fails.
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.
