- European markets outperform US at the start of 2025
- With finance the market’s best performing sector, the portfolio’s banks contribute strongly to returns
- Hermes also a highlight as European luxury sector rises on Richemont read across
The Fund’s A5 share class returned 5.6%* in euro terms in January. This Fund’s target benchmark, the MSCI Europe Index, returned 6.5%.
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 20th, 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.
With finance performing well in the month, the portfolio’s banks were particularly strong; UBS (+16%), UniCredit (+15%), Deutsche Bank (+14%), MedioBanca (+12%) and Banco Santander (+11%) all notched up double-digit percentage gains.
French fashion house Hermes (+17%) 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.
Shares in 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.
Container shipping giant AP Moller-Maersk (-11%) gave back some of the prior weeks’ gains, as a looming US dockworkers strike – which likely would have led to a spike in shipping rates – was called off.
Positive contributors to performance included:
Hermes International (+17%), UBS (+16%) and UniCredit (+15%).
Negative contributors to performance included:
Gamma Communications (-14%), AP Moller Maersk (-11%) and Kingspan (-4.5%).
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.
- This Fund may have a concentrated portfolio, i.e. hold a limited number of investments (35 or fewer) or have significant sector or factor exposures. 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’s investment objective is to target capital growth for investors. Growth stocks tend to pay out lower levels of dividend resulting in lower income yields and may produce more volatile returns than the market as a whole.
- 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.
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.
