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Liontrust China Fund

Q4 2024 review
Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.
  • Strong momentum from the previous quarter faded as stimulus policy specifics came below expectations, with risk mitigation seemingly prioritised over growth stimulation.
  • US tariffs under the new administration – and China's responses – will be a key driver for the market into 2025, along with additional stimulus measures to offset these headwinds and rebalance the economy.
  • Key positive contributions came from our holdings in the technology and financials sectors, offset by weakness in consumer discretionary.

The Liontrust China Fund returned -2.1%* over the quarter, versus the IA China/Greater China sector average of -1.0% and -1.1% from the MSCI China Index (both comparator benchmarks).


Chinese equities entered the fourth quarter with strong momentum following the sharp rally that began in mid-September. The initial catalyst was the coordinated stimulus measures announced by the People's Bank of China (PBoC), China Securities Regulatory Commission (CSRC) and China Banking and Insurance Regulatory Commission (CBIRC) on September 24th. These measures came just days after the Fed had kicked off its easing cycle with a 50 basis point cut. This was reinforced by a Politburo meeting on the 26th calling for stronger housing and fiscal stimulus. This represented a broad shift in policy stance, and additional details on fiscal support for both the property market and consumers were expected in the weeks that followed.

However, this momentum faded as stimulus policy specifics fell short of expectations, with risk mitigation seemingly prioritised over growth stimulation – including local government debt swaps but not meaningful consumption stimulus. This was exacerbated by the re-election of Donald Trump and the Republican sweep in the US election and the likelihood of higher tariffs alongside the stricter controls over chips. The MSCI China Index fell by 1.1% during the quarter, marginally ahead of emerging markets (-1.5%) but behind developed markets (+6.9%). US tariffs under the new administration – and China’s responses – will be a key driver for the market into 2025, along with additional stimulus measures to offset these headwinds and rebalance the economy.

The Fund’s dispersion in sector returns was again high, with the technology and financials sectors generating positive returns of +28% and +12%, respectively, while real estate, materials, consumer discretionary and healthcare fell by 9-12%. Key positive contributions came from our holdings in the technology and financials sectors, offset by weakness in consumer discretionary.

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

 

Dec-24

Dec-23

Dec-22

Dec-21

Dec-20

Liontrust China C Acc GBP

17.7%

-22.2%

-15.5%

-16.7%

26.5%

MSCI China

21.6%

-16.2%

-12.1%

-21.0%

25.5%

IA China/Greater China

13.8%

-20.2%

-16.0%

-10.7%

33.5%

Quartile

1

3

2

3

3

*Source: FE Analytics, as at 31.12.24, primary share class, total return, net of fees and income reinvested.

Understand common financial words and terms See our glossary
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. 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 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. Investments in emerging markets may involve a higher element of risk due to less well-regulated markets and political and economic instability. This may result in higher volatility and larger drops in the value of the fund over the short term. 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. ESG Risk: In reference to any component (where applicable) of a fund's investment process that uses external ESG data, there may be limitations to the availability, completeness or accuracy of ESG information from third-party providers, or inconsistencies in the consideration of ESG factors across different third party data providers, given the evolving nature of ESG.

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.

Global Equities

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