Liontrust GF European Smaller Companies

• European markets lag the US on Trump election, before rallying towards the end of the month.
• Games Workshop the portfolio’s biggest monthly mover, rallying sharply on an upgrade to profit guidance.
• Q3 reporting season shaped portfolio returns, with Buzzi and Rightmove rallying while Fugro and Solvay gave up ground. 

The Fund’s A3 share class returned 1.0%* in euro terms in November. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned 1.2%.

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 (+4.3%), communication services (+3.3%) and industrials (+2.9%) fared well while materials (-1.8%) and consumer discretionary (-1.2%) slid.

Games Workshop (+20%) announced trading since its last update in mid-September has been better than expected, with six-month revenues to 1 December now on track for at least £260 million and profit before tax of over £120 million. The update prompted low single-digit upgrades to analyst’s full-year forecasts, with the share price gains placing Games Workshop on the brink of the FTSE 100 index.

Although a Q3 trading update from Buzzi (+11%) outlined ongoing tough conditions in its markets, shares in the cement and concrete group rallied on relief that full-year guidance was maintained. Net sales fell 3.6% over the first six months of the year as demand in central Europe remains depressed, with Italy and the US also experiencing prolonged downturn. Despite the softening of demand in Q3, Buzzi still expects to achieve 2025 earnings at a similar level to the prior year.

Online property listing portal Rightmove (+11%) rose on a reassuring update covering the four months to 31 October. The company confirmed 2024 guidance and commented on greater optimism among its estate agent partners due to improving transaction flow, positive if subdued house price growth and stable mortgage rates.

A 0.7% like-for-like revenue decline in Q3 was below expectations for Fugro (-18%), the specialist in geotechnical surveys. While in Europe-Africa and Asia Pacific Fugro is experiencing demand strength across energy, infrastructure and marine markets, activity levels have been subdued in the Americas and Middle East, with geopolitical risks resulting in delays to a number of key oil & gas projects.

Belgian chemicals group Solvay (-12%) also released Q3 numbers that fell short of investor expectations. While Q3 net sales rose 3.9% organically year-on-year, this reflected a positive volume impact. Prices were down, resulting in underling EBITDA falling very slightly (-0.3%). Solvay maintained its 2024 outlook.

Q3 sales growth of 8.7% was solid for Kid (-11%), the Nordic Home textile retailer, but earnings declined due to an increase in operating costs – primarily the impact of employee bonuses and higher salaries.

Positive contributors to performance included:

Games Workshop (+20%), Buzzi (+11%) and Rightmove (+11%).

Negative contributors to performance included:

Fugro (-18%), Solvay (-12%) and Kid (-11%).

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

  *Source: Financial Express, as at 30.11.24, total return (net of fees and income reinvested).

**Source: Financial Express, as at 30.09.24, total return (net of fees and income reinvested). Discrete data is not available for ten full 12-month periods due to the launch date of the portfolio (01.02.17). Investment decisions should not be based on short-term performance.

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. As the Fund is primarily exposed to smaller companies there may be liquidity constraints from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. In addition the spread between the price you buy and sell units 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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