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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.
Key takeaways
- European equity markets experience a broad-based rally, with investor sentiment supported by the US-China trade deal, US rate cut, and ongoing AI investment.
- The rally saw gains for value and growth style factors, with a recovery for momentum, but small caps lagged their larger peers.
- Swedish telecoms group Ericsson and Finnish materials handling specialist Konecranes lead the portfolio’s gainers.
Performance
The Fund’s A3 share class returned -0.1%* in euro terms in October. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned 1.1%.
Commentary
Equity indices globally climbed to notch new all-time highs in October, aided by an easing of trade tensions between the US and China.
Ahead of a summit in South Korea, Trump had threatened a 100% import tariff on Chinese goods, while China had imposed export controls on rare earths minerals – a key component in the production of a range of goods including smartphones and electric vehicle batteries. The agreement of a one-year trade deal to avoid these restrictions sparked a significant relief rally.
Sentiment was also boosted by an interest rate cut from the US Federal Reserve – the second this year – as well as a number of new corporate commitments to boost AI investment.
This supportive environment allowed most areas of European markets to enjoy a broad-based rally. Utilities (+7.4% in euro terms), IT (+6.5%) and energy (+6.0%) were the most buoyant sectors in October, with only communication services (-3.0%) recording a negative return.
From a style perspective, both MSCI Europe Growth (+2.4%) and MSCI Europe Value (+2.8%) participated fairly equally in the market rally.
This corresponds to the constructive trend identified by our market regime indicators. Market valuation continues to be reasonable and levels of corporate mal investment remain low. Our investor anxiety indicator continues to fall, suggesting a balanced portfolio by style, albeit with an emphasis on momentum.
BPER Banca (+9.7%), the Italian bank in the process of combining with Banco Popolare di Sondrio, rallied after entering a synthetic position to purchase exposure equivalent to 10% of its share capital – a strategic move which would underpin any future share buyback programmes.
Playtech (-29%) fell on the escalation of a dispute with gaming peer Evolution. In 2021, US regulators began an investigation into Evolution’s activities after receiving a number of allegations of irregular practices. The probe concluded in 2024. In October, Evolution named Playtech as the firm behind those allegations and accused it of a smear campaign.
Following an 80%+ share price rally in 2025, German web hosting and cloud computing group Ionos Group (-23%) saw some profit taking alongside broker ratings downgrades.
Positive contributors to performance included:
Buzzi (+12%), BPER Banca (+9.7%) and Serco Group (+6.5%).
Negative contributors to performance included:
Playtech (-29%), Ionos Group (-23%) and Avon Technologies (-11%).
Discrete years' performance (%) to previous quarter-end:
| Sep-25 | Sep-24 | Sep-23 | Sep-22 | Sep-21 |
Liontrust GF European Smaller Companies A3 Acc EUR | 8.2% | 21.1% | 14.2% | -20.7% | 59.1% |
MSCI Europe Small Cap | 8.4% | 20.3% | 14.0% | -26.9% | 38.0% |
| Sep-20 | Sep-19 | Sep-18 |
Liontrust GF European Smaller Companies A3 Acc EUR | -1.9% | -6.7% | 2.0% |
MSCI Europe Small Cap | 0.2% | -1.8% | 3.4% |
Key Features of the Liontrust GF European Smaller Companies Fund
The investment objective of the Fund is to achieve long term capital growth by investing primarily in European smaller companies. The Fund may invest in all economic sectors in all parts of the world, although it is intended it will invest primarily in equities and equity related derivatives (i.e. total return swaps, futures and embedded derivatives) in European companies (including the UK and Switzerland). The majority of the assets of the Fund (more than 85%) are expected to be invested in smaller companies (with a market capitalisation of less than 5 billion euros at the time of the initial investment). In normal conditions, the Fund will aim to hold a diversified portfolio, although at times the Investment Adviser may decide to hold a more concentrated portfolio, and it is possible that a substantial portion of the Fund could be invested in cash or cash equivalents. The Fund may use FX forwards to hedge the Fund’s currency exposures. 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.
5 (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 MSCI Europe Small -Cap Index net total return (the “Benchmark”) by virtue of the fact that it seeks to outperform the Benchmark. However 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.
- Concentration Risk: 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.
- Smaller Companies Risk: as the Fund is primarily exposed to smaller companies there may be liquidity constraints 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. In addition the spread between the price you buy and sell units will reflect the less liquid nature of the underlying holdings.
- 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.
