Liontrust GF Global Alpha Long Short Fund

Key highlights

• Global equity markets supported by strong corporate earnings, easing geopolitical tensions, and a more accommodative monetary policy stance from major central banks.
• The largest contributors to portfolio performance came from AI beneficiaries such as SK Hynix and Snowflake.
• Marvell added to the portfolio on strong capex guidance from data hyperscalers.

Performance

The Liontrust GF Global Alpha Long Short Fund returned 0.1% in US dollar terms in October, compared with the 0.4% return of the Secured Overnight Financing Rate reference benchmark and the 0.7% return of the HFRX Equity Hedge (USD) Index, also a reference benchmark.  

Commentary

Market backdrop

Global equity markets continued their upward trajectory in October, supported by strong corporate earnings, easing geopolitical tensions, and a more accommodative monetary policy stance from major central banks. 

Japan performed strongly with the Nikkei 225 up 15% (sterling terms), driven by tech sector strength and supportive government policy. Europe posted more modest gains (STOXX 600 +3.0% in sterling terms) against a difficult backdrop of political uncertainty in France.

In the US, a slightly lower than expected CPI at 3.0% reinforced the Fed’s dovish pivot which accompanied the 25bps rate cut in October. This provided a tailwind for risk assets and, when coupled with strong Q3 earnings growth of 10.7% – led by technology and consumer discretionary sectors – set the scene for the S&P 500 to reach new highs as it delivered the seventh consecutive month of gains. Notable gains came from Nvidia, AMD, Amazon, and Alphabet. Gains were narrowly concentrated in large-cap growth stocks with mid-caps and equal-weight indices lagging. So far, the US government shutdown has largely been shrugged off by investors but remains in the background.

Asian markets overall performed strongly; Japan was the best performing developed market globally, China saw a rebound in technology stocks, aided by domestic stimulus and improving trade relations with the US, while South Korea extended its year-to-date gains to +70% by month end. 

Geopolitics eased somewhat with the ceasefire in Gaza although the Ukraine/Russia appears at an impasse currently.

Portfolio review

The largest contributors to portfolio performance over the month came from AI beneficiaries:

• In the AI infrastructure basket, the long SK Hynix (+58% in US dollar terms) benefited from surging demand for AI memory chips, particularly HBM3E and DDR5 for servers. The company posted record Q3 profits and announced mass production of HBM4, securing full capacity bookings into 2026. Strategic partnerships with OpenAI and Broadcom further boosted sentiment.
• In the AI software basket, the long Snowflake (+22%) surged following Q3 results and revenue growth of 32% year-on-year, driven by enterprise adoption and strong customer retention which led to raised full-year guidance.

Elsewhere the consumer basket benefitted from a number of the shorts in the fast food retailing sector posting disappointing results, which aligns with our theme of a weak US consumer. 

Detractors over the month included BayCurrent Consulting (-22%) which fell in early October on what appeared to be profit-taking, dragging down the digitalisation basket. Here, shorts also dragged as a number of names rose in the month.  

China was also a weak theme as renewed investor caution over China’s regulatory environment and geopolitical risks led to some profit taking following strong year-to-date performance.

Portfolio changes

We added a new position in Marvell over the month; Amazon’s Q3 results confirmed strong Trainium 2/3 (custom AI chips) demand, which is key for Marvell. Coupled with strong capex guidance from the other hyper scalers within results, this has given us renewed confidence in Marvell’s ability to exceed current market estimates for growth.  

We pared back some China exposures, selling Baidu but maintaining a net long.

In the digitalisation basket, we added to the shorts – taking advantage of what we feel is a rally in some lower quality names.

We ended the month with net exposure of 37% and gross of 136%, somewhat lower than average reflecting a more cautious stance into the final months of the year.

Outlook

The outlook for the rest of 2025 continues to present plenty of opportunities for differentiated and diversified returns in the equity markets. In our view, the path to the best returns will likely continue to lie outside the concentrated Mag7 trade; these stocks now account for 40% of the S&P market capitalisation and this has proved troublesome for active managers bent on finding better alternatives. The evidence of the first nine months of 2025 suggests this is becoming easier. 

At the same time, risks are building around the world – both geopolitical and economic. Much of the US data remains weak, yet headline GDP figures are robust. High levels of AI capital investment are having a meaningful impact at the headline level, but this has little effect on the low-end consumer. 

Given this backdrop, our base case is that equity markets globally remain little changed in the final quarter of the year but that there will be plenty of ways to enhance returns beyond the index level. Key themes include defence spending in Europe; the catch-up trade in Chinese tech/AI versus the US; Japanese digitalisation; and emerging markets equities on US dollar weakness – all providing diversification from the US. 

Within the US, we take the view that the winners of the next 10 years will not be the same as the last decade, with companies that use AI effectively across multiple sectors offering interesting opportunities. Within technology, we remain cautious on the longevity of the AI capex cycle and favour selective names that support the trends in AI rather than the titans that build it. 

The path of the US dollar is a critical component of many investment themes today and we expect it to remain weak on the back of government debt levels and a servicing bill that is now close to the 4% of GDP, seen by many as an exit velocity level. Assuming this to be the case, then any equity investments must be viewed through the lens of a weak dollar and this is perhaps the biggest factor in deciding geographic exposures as well as other adjacent ideas like the continued success of investing in stores of value like gold, gold miners, and crypto. 

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

Source: FE Analytics, as at 30.09.25, total return, net of fees and income reinvested. *The Fund was launched on 24 January 2025 to receive the assets of GAM Star Alpha Technology, which was a sub-fund of GAM Star plc (“the merging fund”), which was very similar to the Fund. Because of the similarities between the merging fund and the Fund, the past performance of GAM Star Alpha Technology C Acc - EUR share class has been used for periods prior to the Fund’s launch date.