Liontrust European Dynamic Fund

• European markets lag the US on Trump election, before rallying towards the end of the month.
• AP Moller-Maersk continues to rally after upgrading 2024 targets in October due to strong shipping demand trends.
• Q3 reporting season shaped portfolio returns, with Pandora rallying while Kingspan gave up ground. 

The Fund returned -0.7% in sterling terms in November. The MSCI Europe ex-UK Index comparator benchmark returned -1.5% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was -1.3%.

While Donald Trump’s election victory prompted a strong rally in US shares on the anticipation of market-friendly policies, investors in Europe were less sure what to make of events. The prospect of trade frictions caused some concern, but sentiment improved towards month end and the market rallied. From a sector perspective, IT (+1.9%) and real estate (+1.4%) fared well while consumer staples (-4.9%), materials (-4.0%) and consumer discretionary (-3.7%) slid the most.

Danish shipping giant AP Moller-Maersk (+9.1%) continued to move higher in November, having upgraded full-year guidance during October. Strong container market demand and ongoing disruption to Red Sea shipping routes has contributed to an upgrade of EBITDA expectations to $11.0 to $11.5 billion (up from $9.0 billion to $11.0 billion). The free cash flow forecast was lifted from at least $2 billion to at least $3 billion.

Danish jewellery retailer Pandora (+8.2%) reported Q3 organic sales growth of 11%, including a 7% like-for-rise, with the remainder coming from store network expansion. The company also lifted its 2024 growth guidance to a range of 11% to 12%, the high end of its prior 9% to 12% range.

Among the detractors, Kingspan Group (-13%) shares lost some ground as a Q3 trading update indicated 2024 earnings would be in line with the 2023 levels, a touch below investors’ expectations. The insulation and building envelopes specialist has seen subdued near-term demand but order backlogs at strong levels – suggesting 2025 activity could benefit at the expense of 2024.

UniCredit (-10%), the international bank based in Italy, has turned its acquisitive attentions from Germany’s Commerzbank towards domestic competitor BPM. At this stage it remains highly uncertain the $10.5bn offer will be successful.

Positive contributors to performance included:

AP Moller-Maersk (+9.1%), Pandora (+8.2%) and UBS Group (+6.5%)

Negative contributors to performance included:

Kingspan (-13%), UniCredit (-10%) and DHL Group (-7.4%).

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

*Source: Financial Express, as at 30.11.24, 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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