Liontrust Sustainable Future UK Growth Fund

Key takeaways

• The Fund underperformed in a market dominated by large-cap, value-oriented stocks, with banks in particular performing strongly.
• Oxford Biomedica, Kainos Group and Helios Towers were among the top performers, while London Stock Exchange and Judges Scientific were among the largest detractors.

Performance

The Fund returned -0.9%* over the quarter versus the IA UK All Companies sector average of 3.2% and the 7.8% return from the MSCI UK Index (both of which are comparator benchmarks).

Commentary

The Fund underperformed in a market dominated by large-cap, value-oriented stocks, with banks in particular performing strongly. While the broader UK equity market has risen significantly, our mid- and small-cap holdings have not fully participated. A key factor has been the domestic bias of these companies, which have struggled amid ongoing economic weakness in the UK.

Despite this, we believe the UK market – especially the mid- and small-cap segments where we invest – remains attractively valued and offers compelling opportunities. Although economic momentum remains subdued, a shift towards lower interest rates could act as a catalyst to stimulate activity and support a recovery in portfolio performance.

The top performer over the quarter was Oxford Biomedica (+76%), the cell and gene therapy contract development and manufacturing organization. Held under our Enabling innovation in healthcare theme, shares in the company climbed following the completion of a £60 million capital raise through a placing and subscription of new shares. Management indicated the funds would support strategic initiatives to grow US commercial-scale manufacturing capabilities and improve process quality, efficiency and output. 

Additionally, Oxford Biomedica announced that first-half revenue for the period ending 30 June was projected to reach £70 million - £73 million, marking a year-over-year growth of 38% to 44% compared to £51 million in the same period of 2024.

Kainos Group (+27%) delivered strong performance following an encouraging trading update that positioned the technology consulting and software development firm at the top end of market expectations. 

The company anticipates revenues for the fiscal year ending to reach the upper bound of consensus estimates, which currently range between £378 million and £393.4 million. The positive outlook was fuelled by robust sales performance across its key divisions.

Helios Towers (+23%) was another notable performer after reporting robust financial performance for the first half of 2025, posting a 9% year-on-year increase in adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) and a $40 million rise in free cash flow. Revenue grew by 7%, driven by continued tenancy expansion, while operating profit rose by 1%. Exposed to our Connecting people theme, Helios Towers owns and operates telecommunications towers and telecom infrastructure across Africa, supporting wider, more reliable access to the services and benefits of mobile connectivity in underserved markets.

The largest detractor over the period was data service provider London Stock Exchange Group (LSEG, -20%). LSEG supplies unique and essential datasets to financial market participants and remains well positioned to benefit from the long-term trend toward greater transparency and data-driven decision-making.

However, its share price weakness reflected investor concerns that its business model could face disruption from advances in artificial intelligence. Earnings estimates have continued to be upgraded over the last two years, yet the share price has fallen sharply of late despite no material change in underlying expectations. This move appears driven by a narrative that large language models (LLMs) could create competing data providers at a fraction of the cost.

We believe LSEG is far more than a “pure data” supplier, and that its products and services cannot be easily replicated by an LLM. While we acknowledge these risks and continue to monitor them closely, we believe the market may be underestimating the company’s ability to adapt. LSEG is deeply integrated into its clients’ workflows, and we view it as more likely that it will leverage AI to enhance its product offerings and efficiency rather than be displaced by it.

Similarly, shares in accounting and enterprise software specialist Sage (-12%) were impacted amid growing concerns over the competitive threat posed by AI. Exposed to our Enabling SMEs theme, Sage enables small and medium sized enterprises (SMEs) to manage their finances and comply with tax and other standards more effectively. We believe SMEs are the backbone of the economy, so enabling them to be more resilient and competitive with larger enterprises is a net benefit for society.

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