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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.
- UK equities delivered modest gains in August, led by large caps, while mid- and small-caps lagged; the Bank of England cut rates to 4% in a narrowly split decision, highlighting policy uncertainty.
- JTC rose on takeover interest, while Spirax, BP, Bunzl and Diageo advanced on solid earnings updates.
- Auction Technology Group and Domino’s Pizza weighed on performance after issuing profit warnings.
The Liontrust GF Special Situations Fund returned -2.2%* in August. The Fund’s comparator benchmark, the FTSE All-Share, returned 0.9%.
UK equities advanced through much of August, with index performance once again driven by large cap stocks outperforming at the expense of mid and small caps. The FTSE 100 (+1.2%) led the UK market in August, while the mid-cap FTSE 250 (-1.2%) and the FTSE Small Cap ex-Investment Companies (-1.6%) both posted losses. The FTSE AIM All-Share (+0.4%) delivered a small positive return, though this was driven heavily by natural resources stocks (Basic Materials contributing +1.8% to AIM index return and Energy +0.4%), while most other sectors delivered negative contributions.
The Bank of England reduced interest rates by 25 basis points to 4%, in line with market expectations. Notably, the decision was narrowly split, with the MPC voting 5–4, underlining the complexity of the current economic backdrop and hinting at a more cautious approach to further easing.
2025 has been an extremely active year for inbound M&A activity for the Fund’s holdings already, with two confirmed takeover bids (Spectris and Alpha Group) and several companies subject to private equity interest earlier in the year (GlobalData and Craneware). In August, JTC (+23%), a leading provider of fund solutions and corporate services, became the latest holding to join that list. JTC shares surged after the company announced that it had received and rejected two preliminary takeover approaches from private equity firm Permira. Under the Takeover Code ‘put up or shut up’ (PUSU) rules, Permira now has until 26 September to either announce a firm intention to make an offer, or walk away.
As we have extensively commented in previous reviews, the elevated level of inbound M&A interest only serves to highlight the extraordinary current valuation opportunity thrown up by negative sentiment towards UK equities – an opportunity which is notably concentrated among mid and small caps, which have borne the brunt of selling pressure in recent years.
Turning to trading updates from the Fund’s companies, Spirax Group (+15%) reported a 7% organic rise in adjusted operating profit to £159 million, delivering an operating margin of 19.3%, surpassing market forecasts. Reflecting confidence in its financial position, the company also raised its interim dividend by 3% to 48.9 pence. Despite ongoing headwinds, Spirax reaffirmed its full-year guidance, projecting continued organic revenue growth ahead of global industrial production. Management also expects margin expansion in the second half, supported by operational efficiencies and a recovery across key markets.
BP (+8.3%) reported an underlying replacement cost profit of $2.35 billion for the three months to June, comfortably ahead of analyst expectations. The company announced a dividend increase to 8.32 cents from 8 cents and confirmed it will maintain its $750 million share buyback programme for the second quarter. The shares were further supported by news of BP’s largest oil and gas column discovery in 25 years.
Despite announcing a profit warning in April, Bunzl (+11%), the multinational distribution and outsourcing company, offered some relief by resuming its £200 million buyback programme and reaffirming guidance for a stronger second half of 2025. Adjusted operating profit had fallen 7.6% to £405 million in the first half of the year, due to volume pressures, deflation, and subdued demand.
Diageo (+11%) delivered 1.7% organic net sales growth for the year ending 30 June, despite a softer fourth quarter and a challenging market backdrop. After adjusting for the Cîroc transaction in North America, growth stood at 1.5%, in line with company guidance.
US spirits net sales rose 1.6%, underpinned by a 16.9% surge in tequila sales, led by Don Julio’s 41.9% growth. The brand’s strong cultural resonance and successful activations drove this performance, while the company’s Crown Royal also contributed positively to the results.
On the other side of the coin, shares of Auction Technology Group (-31%) fell sharply following a profit warning and the announcement of its acquisition of Chairish, a US-based marketplace specialising in vintage furniture and art.
The company now anticipates its adjusted EBITDA margin for the fiscal year of between 42-43%, down from its previous forecast of 45-46%. Although third-quarter revenue showed slight improvement over the first half, profitability has been squeezed – largely due to a shift in revenue mix and increased shipping volumes that yielded lower margins.
Domino's Pizza Group (-17%) cut its annual core profit forecast, citing rising labour costs and subdued customer demand as key pressures on performance. The company now expects underlying core profit for 2025 to range between £130 million and £140 million, a reduction from its earlier guidance of £141 million to £150 million. While the short term macro-economic backdrop is undoubtedly unhelpful, we were encouraged by the company’s focus on operational improvements, automation and digitisation, relentless pursuit of best-in-class customer service, and – most importantly – evidence of market share gains to support the long term investment case.
Shares in the other key detractors – Fevertree Drinks (-15%), RELX (-12%) and Mortgage Advice Bureau (-12%) weakened in the absence of concrete newsflow. Fevertree gave up some of its recent share price gains after an analyst released a rating downgrade note. Mortgage Advice Bureau, having enjoyed several months of share price strength in early summer, proved susceptible to weakening sentiment, likely catalysed by concerns that a slower pace of monetary policy easing may serve to dampen housing market activity in the short term. RELX shares fell amid a broader negative sentiment shift towards shares perceived to be potentially impacted by the evolution of AI. We are of the strong view that AI is likely to be a tailwind rather than a headwind for the company over the medium term. RELX combines ownership of extensive and long-standing data sets with a front footed approach to leveraging AI investment and partnerships to improve its customer offering, such as a recent strategic alliance signed with the high-profile legal generative AI disruptor HarveyAI.
In terms of portfolio activity, Alpha Group and Spectris both exited the portfolio during the month of August ahead of the completion of takeover bids, with shares in both companies trading at narrow discounts to agreed terms.
Positive contributors included:
JTC (+23%), Spirax Group (+15%), Bunzl (+11%), Diageo (+11%) and Renishaw (+8.6%)
Negative contributors included:
Auction Technology Group (-31%), Domino’s Pizza Group (-17%), Fevertree Drinks (-15%), Mortgage Advice Bureau (-12%) and RELX (-12%)
Discrete years' performance** (%) to previous quarter-end:
Past performance does not predict future returns
| Jun-25 | Jun-24 | Jun-23 | Jun-22 | Jun-21 |
Liontrust GF Special Situations C3 Inst Acc GBP | -4.5% | 12.3% | 6.3% | -11.9% | 23.1% |
FTSE All Share | 11.2% | 13.0% | 7.9% | 1.6% | 21.5% |
| Jun-20 | Jun-19 | Jun-18 | Jun-17 | Jun-16 |
Liontrust GF Special Situations C3 Inst Acc GBP | -7.9% | 6.6% | 15.7% | 19.8% | 8.2% |
FTSE All Share | -13.0% | 0.6% | 9.0% | 18.1% | 2.2% |
*Source: Financial Express, as at 30.08.25, total return (net of fees and income reinvested), sterling terms, C3 institutional class. Non fund-related return data sourced from Bloomberg. **Source: Financial Express, as at 30.06.25, total return (net of fees and income reinvested), primary class. Investment decisions should not be based on short-term performance.
Key Features of the Liontrust GF Special Situations Fund
The investment objective of the Fund is to provide long-term capital growth by investing in mainly UK equities using the Economic Advantage investment process. The Fund invests at least 80% in companies traded on the UK and Irish stock exchanges. The Fund is not restricted in choice of investment in terms of company size or sector. The Fund has both Hedged and Unhedged share classes available. The Hedged share classes use forward foreign exchange contracts to protect returns in the base currency of the Fund.
5 years or more.
4 (Please refer to the Fund KIID for further detail on how this is calculated)
Active
The Fund is considered to be actively managed in reference to the FTSE All Share Index (the “Benchmark”) by virtue of the fact that it uses the Benchmark for performance comparison purposes. The Benchmark is not used to define the portfolio composition of the Fund and the Fund may be wholly invested in securities which are not constituents of the benchmark.
Understand common financial words and termsSee our glossary
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.
- 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
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.com 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.
