- European markets faced sustained pressure in December, driven by global uncertainties and cautious investor sentiment.
- December’s outperformance was driven by the short book, partially offset by negative returns from the long book which was in line with the benchmark.
- Within the long book, Novo Nordisk shares fell after clinical trial results for its obesity drug showed meaningful weight loss but missed high investor expectations.
The Fund’s A4 share class returned -0.1%* in euro terms in December. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned -0.5%.
European markets faced sustained pressure in December, driven by global uncertainties and cautious investor sentiment. Concerns over anticipated US trade policies under President-elect Donald Trump, coupled with persistent geopolitical tensions, weighed on market performance. In response to these challenges, the European Central Bank (ECB) took further steps to support the economy, cutting its deposit rate by a quarter percentage point to 3%. This marked the ECB’s fourth rate cut in 2024, reflecting its commitment to easing borrowing conditions.
From a sector perspective, consumer discretionary (+4.3%), information technology (+4.1%) and financials (+1.7%) were the only areas to post a gain over the month, while real estate (-6.0%), healthcare (-4.4%) and utilities (-3.6%) slid the most.
Outperformance from the Fund in December was driven by its short book (c.29% NAV), with the portfolio making a positive contribution of 0.5%. This was offset by negative return from the Fund’s long book, which returned -0.4%, in-line with the benchmark return.
Short book contributors included a manufacturer of active pharmaceutical ingredients, which saw its shares decline following the announcement of the resignation of the Chair of the Board and the CEO. Replacements were announced.
One of the long book’s strongest performers was Pandora, whose shares rallied further as investors continued to digest November’s upgraded financial guidance. The jewellery retailer now projects organic growth of 11-12% for the year (from 9-12%) and maintained a stable EBIT margin forecast of around 25%.
Despite a tough year for its sector, Hermes, the French luxury fashion house, continued to buck this trend, posting another solid month of performance. In December, Hermes received an upgrade to a buy rating by a covering analyst, reflecting growing confidence in the company's ability to deliver consistent results and navigate headwinds facing the broader luxury industry.
Shares in Renault rose primarily due to reports of potential merger talks between Nissan and Honda. As Renault holds a significant stake in Nissan.
Long book detractors included Danish drug maker Novo Nordisk, known for its blockbuster drugs Ozempic and Wegovy, which fell sharply after the company released results from a clinical trial for its experimental obesity drug, CagriSema. The trial showed that CagriSema helped patients lose an average of 22.7% of their body weight in a late-stage study, falling short of the trial's 25% goal.
While the results were still significant and demonstrated meaningful weight loss, they did not fully meet elevated investor expectations. However, the company attributed the lower than expected efficacy to the protocol (as patients have a choice of staying on the lower dose to have fewer side effects or taking the higher dose which shows greater efficacy but with the risk of greater side effects). Following these results, the company intends to initiate another Phase 3 trial with a different protocol to optimise weight loss.
Reliance Steel, a provider of diversified metal solutions, continued its weakness following the underwhelming Q3 results and softer outlook for Q4 (due to lower shipments). H&R Block, a specialist in tax preparation, accounting, and consumer financial services, also saw its shares decline without any apparent catalyst.
Discrete years' performance (%) to previous quarter-end**:
|
|
Dec-24 |
Dec-23 |
Dec-22 |
Dec-21 |
Dec-20 |
|
Liontrust GF European Strategic Equity A4 Acc EUR |
18.5% |
1.4% |
18.3% |
32.9% |
-10.0% |
|
MSCI Europe |
8.6% |
15.8% |
-9.5% |
25.1% |
-3.3% |
|
HFRX Equity Hedge EUR |
6.2% |
4.7% |
-5.2% |
11.0% |
2.9% |
|
|
Dec-19 |
Dec-18 |
Dec-17 |
Dec-16 |
Dec-15 |
|
Liontrust GF European Strategic Equity A4 Acc EUR |
23.2% |
-7.1% |
4.2% |
4.8% |
6.1% |
|
MSCI Europe |
26.0% |
-10.6% |
10.2% |
2.6% |
8.2% |
|
HFRX Equity Hedge EUR |
8.5% |
-12.3% |
7.8% |
-1.7% |
-3.1% |
*Source: Financial Express, as at 31.12.24, total return (income reinvested and net of fees).
**Source: Financial Express, as at 31.12.24, total return (income reinvested and net of fees). Investment decisions should not be based on short-term performance.
Key Features of the Liontrust GF European Strategic Equity Fund
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. The Fund may, under certain circumstances, invest in derivatives, but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead. The use of derivative contracts may help us to control Fund volatility in both up and down markets by hedging against the general market. 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. The Fund uses derivative instruments that may result in higher cash levels. Outside of normal conditions, the Fund may choose to hold higher levels of cash. Cash may be deposited with several credit counterparties (e.g. international banks) or in short dated bonds. A credit risk arises should one or more of these counterparties be unable to return the deposited cash. There is no guarantee that a positive absolute return will be generated over any time period.
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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.
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