The Fund’s A5 share class returned 0.8%* in euro terms in September. This Fund’s target benchmark, the MSCI Europe Index, returned -0.4%.
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 Index lagged both its US and UK peers in September, with the energy (-7.3%), healthcare (-6.9%) and information technology (-2.8%) among the largest fallers. Among sectors to post a positive return were materials (+5.1%), real estate (+4.7%) and information technology (-2.8%).
The Fund’s top performer for the month was UK property listing portal Rightmove (+13%). The company’s shares rose sharply after receiving an initial takeover offer from Australian real estate listing provider REA Group. After rejecting an initial offer of 705p, a 27% premium to the UK company’s prior share price, Rightmove rebuffed three further offers. REA subsequently abandoned its attempt of a takeover on the final day of the month having failed to win over the UK property portal’s board. Following the abandonment, Rightmove gave back some of its share price appreciation.
Shares in Danish shipping and logistics company AP Moller-Maersk (+12%) rose 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 (+8.5%), 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.
There was a significant amount of newsflow on Novo Nordisk (-16%) 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 (-6.8%) fell after it adjusted guidance for the 2024 financial year. The company now expects an operating profit 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 resulting result in additional warranty costs “in a high three-digit million amount” in the third quarter.
Positive contributors to performance included:
Rightmove (+13%), AP Moller-Maersk (+12%) and Industria de Diseño Textil (+8.5%)
Negative contributors to performance included:
Novo Nordisk (-16%), BMW (-6.8%) and Renault (-9.2%)
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.
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 (35 or fewer) or have significant sector or factor exposures. If one of these investments or sectors / factors fall in value this can have a greater impact on The Fund's value than if it held a larger number of investments across a more diversified portfolio. The fund’s investment objective is to target capital growth for investors. Growth stocks tend to pay out lower levels of dividend resulting in lower income yields and may produce more volatile returns than the market as a whole. 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. 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.
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