Liontrust GF European Strategic Equity Fund

• European markets outperform US at the start of 2025
• The Fund’s monthly return reflects its lower (70%) net market exposure
• Long book highlights included 4imprint Group rebounding from profit taking after an upbeat trading update

The Fund’s A4 share class returned 3.4%* in euro terms in January. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned 6.5% and 2.0% respectively.

Following the marked outperformance of the US in 2024, the tables were immediately turned in January 2025 as the MSCI Europe ended the month as one of the best performing developed equity markets.

Following a fairly sharp upwards adjustment in interest rate expectations during Q4 of last year, as some forecast rate cuts were scrubbed out by economists, global investor sentiment was boosted in January by US inflation data that came in marginally below expectations. The mood was further lifted by a delay in implementing much-feared trade tariffs following Trump’s US inauguration on the 20^th, although the threat continued to loom large at month end.

European markets’ strong monthly performance compared to the US was in large part due to its relative insulation from the technology sector sell-off sparked by seemingly transformative AI progress from China’s DeepSeek. While the US market rolled over in the last week of the month as mega-cap tech names such as Nvidia adjusted sharply lower, the European market held on to strong gains. 

All sectors of the MSCI Europe Index were comfortably in positive territory, with IT (+8.7%), communication services (+8.5%) and finance (+8.4%) leading the way while consumer staples (+2.2%), utilities (+2.7%) and real estate (+3.5%) lagged.

The Fund’s participation in the market rally was limited by its net market exposure of 70%.

Within the long book, 4imprint Group (+23%) bounced strongly. Having enjoyed a very strong share price run in the prior two years on the back of good trading, it experienced some profit taking in the second half of 2024. However, shares in the promotional merchandise supplier regained momentum in January on the back of an upbeat full-year trading update. Profit before tax for 2024 will be at least $153 million, ahead of market expectations. A 3% revenue increase to $1.37 billion was driven by existing customer order growth of 5%, compensating for a 9% drop in new customer orders.

Norwegian home furnishings group Kid ASA (+16%) issued Q4 results which showed a pickup in sales growth. Shares in the company previously weakened in November on Q3’s 6.7% sales increase, but rallied in January as growth recovered to 11.7%.

Mycronic (+12%), the Swedish supplier of high-precision production tools, announced several new orders towards the end of the month – all from existing clients in Asia, for equipment used in the photomask production process used by electronics and semiconductor industries.

French fashion house Hermes (+12%) continued its recent outperformance of the European market and the consumer goods sector, as it benefitted from positive read across from luxury peers Richemont and Burberry.

The long book’s weakest position was Gamma Communications (-14%) gave up ground over the month, despite issuing a trading update which reiterated trading had been on course to meet market expectations for the year to 31 December 2024. Previously, at the interim results stage in September the B2B telecoms provider had raised earnings guidance to the top end of the consensus range at the time.

With the European market experiencing a strong and broad-based rally, a number of short positions were offside for the month. The biggest detractor was a UK listed specialist in semiconductor IP, which rose sharply on news of a jump in Q4 orders, and after management raised financial guidance.

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

*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 RISKS

Past performance does not predict future returns. You may get back less than you originally invested.

We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.

• 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 

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.

DISCLAIMER

This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.

It 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.

This information and analysis 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, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, 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. 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.