The Fund returned -0.4% in sterling terms in September. The MSCI Europe ex-UK Index comparator benchmark returned -1.6% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was -0.9%.
Newsflow in equity markets leading into the month was primarily focused on the widely anticipated US interest rate decision – with the US Federal Reserve pushing ahead towards the end of September with a 50 basis point cut, providing a lift to market sentiment. This development was soon followed by a series of stimulus measures from China in a further boost to investor confidence; however, concerns over geopolitical risks, especially the ongoing conflict in the Middle East, added some volatility to markets towards the end of the month. In Europe, having kept interest rates on hold in its July meeting, the European Central Bank (ECB) cut rates by 25 basis points in September, citing that data indicated a softening of inflation over the period.
The MSCI Europe ex UK index lagged both its US and UK peers in September, with the healthcare (-7.3%), energy (-6.6%) and information technology (-4.1%) among the largest fallers. Among sectors to post a positive return were real estate (+5.5%), utilities (+2.8%) and materials (+2.0%).
The Fund’s top performer in September was Danish shipping and logistics company AP Moller-Maersk (+11%), with its shares rising on expectations that labour talks with US port workers would fail and spark a new round of supply-line disruptions, boosting freight rates. The transport giant added a local port disruption surcharge for all cargo moving to and from the US east coast and Gulf coast terminals, to cover higher costs from “potential labour disruptions.”
Industria de Diseño Textil (Inditex, +7.2%), the Spanish multinational clothing company, posted strong net profit for the first half of the year, despite slower sales growth. The company reported that its profit rose 10% to €2.8 billion in the first six months of its financial year, driven by robust sales from its spring/summer collection.
Amadeus IT Group (+5.2%), the Spanish multinational technology company that provides software for the global travel and tourism industry, was also among the notable performers after reaching an agreement with India’s leading airline, IndiGo, to provide travel agents in India and around the world with access to the airline’s new distribution capability (NDC) content via the Amadeus Travel Platform.
There was a significant amount of newsflow on Novo Nordisk (-17%) in September, causing downward pressure on its share price. It was reported that Ozempic, Novo Nordisk’s blockbuster diabetes drug could be one of the next drugs targeted for a price cut in bargaining with the US government’s Medicare program. This comes under the Inflation Reduction Act, which empowers the U.S. government to negotiate drug prices with manufacturers, potentially leading to significant reductions in costs.
The company’s shares also weakened on disappointing data from a clinical trial with its obesity drug, Monlunabant. Finally, an analyst covering the stock reported that sales of its blockbuster weight-loss drug Wegovy may be weaker-than-expected.
Shares in German automobile manufacturer BMW (-7.8%) fell after it adjusted guidance for the 2024 financial year. The company now expects an EBIT margin for 2024 in in the range of 6% to 7% (previously 8% to 10%), attributing the reduction to headwinds in its Automotive Segment resulting from delivery stops and technical actions linked to the Integrated Braking System (IBS). BMW commented that it expects the former to impact over 1.5 million vehicles and result in additional warranty costs “in a high three-digit million amount” in the third quarter.
Novartis, the Swiss pharmaceutical company, weakened after being downgraded to neutral from buy.
Positive contributors to performance included:
AP Moller-Maersk (+11%), Industria de Diseño Textil (+7.2%), Amadeus IT Group (+5.2%)
Negative contributors to performance included:
Novo Nordisk (-17%), BMW (-7.8%), Novartis (-6.3%)
Discrete years' performance (%) to previous quarter-end**:
|
|
Sep-24 |
Sep-23 |
Sep-22 |
Sep-21 |
Sep-20 |
|
Liontrust European Dynamic I Inc |
12.9% |
26.8% |
-8.7% |
42.8% |
3.5% |
|
MSCI Europe ex UK |
14.5% |
19.0% |
-12.8% |
20.9% |
-0.5% |
|
IA Europe Excluding UK |
14.6% |
18.7% |
-16.1% |
22.4% |
3.1% |
|
Quartile |
4 |
1 |
1 |
1 |
2 |
*Source: Financial Express, as at 30.09.24, 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 30.09.24, total return (net of fees and income reinvested), bid-to-bid, primary class.
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.
Overseas investments may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of the Fund. This Fund may have a concentrated portfolio, i.e. hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the Fund's value than if it held a larger number of investments. 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. 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.
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