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VIew NowPast 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.
- The portfolio delivered strong positive performance over the month of July, despite broader macro themes driving large cap outperformance of mid and small caps.
- Alpha Group International and Spectris surged on takeover bids, again serving to highlight the latent value of holdings in the Fund.
- Everplay, AstraZeneca, BP and Shell gained on strong trading updates and resilient performance, while Robert Walters and Convatec fell on weaker trading and US regulatory pressures respectively.
The Liontrust Special Situations Fund returned 2.4%* in July. The FTSE All-Share Index comparator benchmark returned 4.0% and the average return in the IA UK All Companies sector, also a comparator benchmark, was 2.3%.
Global equity markets’ recovery from April’s tariff-triggered sell-off continued in July, with the FTSE making steady gains. US trade policy remained a key feature for market commentators throughout the month, but while the agreement of deals with Japan and the EU helped boost sentiment, investors were largely content to set the trade tariff saga aside and focus on corporate updates.
Once again, sentiment was heavily influenced by broader macro themes, and the FTSE 100 outperformed mid- and small-cap indices. This meant that although absolute performance was strong in the Fund, it proved a tougher month for active managers versus the index. However, in absolute terms, we were encouraged to see broad-based share price strength continuing across many of our mid- and small-cap holdings.
M&A activity was a feature of the portfolio in July.
Alpha Group International (+31%) has been the subject of interest from US payments company Corpay since May, when it disclosed that it had rejected a preliminary cash proposal (of which no details were given). However, Alpha’s Board subsequently described ‘constructive’ talks with Corpay which led it to seek and an extension to the
Takeover Panel’s ‘put up or shut up’ (PUSU) deadline into July. For further insights on Alpha Group, listen to our Stock Exchanges podcast episode here.
Corpay’s subsequent 4250p a share bid in July came in at a 55% premium to Alpha’s undisturbed share price, valuing the group at a £1.6 billion enterprise value. The offer was attractive enough to gain the recommendation of its Board, coming on top of what was already a strong rise in the share price in the year to date prior to the bid.
Spectris (+4.0%) also recommended a takeover in early July as KKR’s £40 cash offer trumped private equity peer Advent’s prior £37.63 conditional proposal. The 96% premium to Spectris’s undisturbed share price is the latest clear signal of the latent value stored across many Fund holdings, and the UK stock market more generally.
The consequence of the UK being an unloved market and small caps being even more out of favour is that UK small caps are currently one of the standout areas of value globally (click here to read our latest insights piece).
With opportunistic private equity investors looking particularly active in picking off undervalued UK businesses, it has been pleasing to see fund holdings GlobalData and Craneware recently rebuff unsolicited approaches and back themselves to deliver superior shareholder value over the medium to long term.
Everplay (+21%), formerly Team17, built on its strong year-to-date performance with another upgrade to profit forecasts. An interim trading update from the video game developer and publisher detailed strong trading in the first half of 2025, with new game releases performing well. While 2025 is still expected to show the usual second-half weighting to trading due to the timing of games releases, Everplay now expects to exceed market expectations. For further insights on Everplay, listen to our Stock Exchanges podcast episode here.
Among the portfolio’s large-cap holdings, shares in AstraZeneca (+12%) have been under some pressure over the last year due to increasing rhetoric from the US administration around the potential to compel drug price reductions. Solid results from the pharma group during July served as a timely reminder to investors of the high quality and globally diversified growth profile of the business.
Q2 constant currency earnings growth of 10% to $26.7 billion was better than consensus expectations, driven by double-digit growth in oncology and biopharma divisions. Despite the Q2 beat, AstraZeneca maintained rather than upgraded full-year guidance, possibly reflecting some conservatism in the face of political and macroeconomic uncertainty, yet the shares rallied strongly during the month nevertheless.
Turning to the portfolio’s detractors, a Q2 trading update from Robert Walters (-22%) warned that already weak trading had deteriorated further recently. The recruitment firm stated that the impact of macroeconomic uncertainty on client and candidate confidence has become more pronounced during the quarter. The company continues to trim its cost base to enable it to trade through this understandably difficult period.
Convatec (-19%) is a provider of medical products designed to help patients manage chronic conditions, including advanced wound care dressings, ostomy care devices, continence care products and infusion sets for diabetic insulin pumps.
Its shares weakened in July as two separate pressures related to US government focus on reducing America’s cost of healthcare combined to hit sentiment. Convatec is potentially impacted by proposals to reduce prices for skin substitutes (a decision that would impact its InnovaMatrix product), as well as the introduction of a consultation to bring continence and ostomy products into scope of a competitive bidding programme.
We remain confident in the longer term prospects for Convatec, which exhibits strong barriers to competition in the form of its intellectual property, with high levels of patents, R&D innovation and category know-how. It also enjoys market leadership positions in its core categories and has a significant strength in distribution, providing products and services in almost 100 countries around the world from nine manufacturing locations. However, the regulatory uncertainty provides an overhang to sentiment in the short term.
Meanwhile, having both fallen heavily in the aftermath of Trump’s early April announcement of Liberation Day trade tariffs – threatening to dampen global trade, growth and energy consumption – BP (+11%) and Shell (+6.2%) continued a steady share price recovery. Shell’s Q2 trading update included better than expected earnings and a share buyback programme maintained at $3.5 billion for the quarter, against expectations for a small reduction; meanwhile, BP’s quarterly update signalled higher-than-expected production, prompting analysts to upgrade earnings expectations.
Positive contributors included:
Alpha Group International (+31%), Everplay Group (+21%), AstraZeneca (+12%), TP ICAP (+12%) and BP (+11%).
Negative contributors included:
Robert Walters (-22%), Convatec (-19%), YouGov (-17%), Mortgage Advice Bureau (-8.0%) and GlobalData (-4.1%).
Discrete years' performance** (%) to previous quarter-end:
| Jun-25 | Jun-24 | Jun-23 | Jun-22 | Jun-21 |
Liontrust Special Situations I Inc | -3.9% | 12.9% | 6.8% | -11.0% | 24.6% |
FTSE All Share | 11.2% | 13.0% | 7.9% | 1.6% | 21.5% |
IA UK All Companies | 8.7% | 12.6% | 6.2% | -8.5% | 27.7% |
Quartile | 4 | 3 | 3 | 3 | 3 |
*Source: Financial Express, as at 31.07.25, total return (net of fees and income reinvested), bid-to-bid, institutional class. **Source: Financial Express, as at 30.06.25, total return (net of fees and income reinvested), bid-to-bid, primary class.
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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 in 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. 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.
- 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.
- Credit Counterparty Risk: 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.
- Diversification Risk: the Fund is expected to invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
- Liquidity Risk: the Fund will invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities 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.
- Smaller Companies Risk: the Fund may invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
- ESG Risk: 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.
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
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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.
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