Liontrust Balanced Fund Q4 2025 review | Insights | Liontrust Asset Management PLC

Past 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 highlights

Global equity markets ended 2025 on a positive but varied note. The MSCI World Index gained 0.8% in December, contributing to a strong 21.1% return for the year, while emerging markets significantly outperformed with their best annual result since 2017.
US markets were broadly flat as investors rotated away from mega-cap growth, while Europe and developed international markets outperformed meaningfully on easing inflation and supportive monetary policy.
Japan advanced modestly in the month as the Bank of Japan continued gradual policy tightening, contributing to currency adjustments and global factor rotations.

Performance

The Liontrust Balanced Fund returned 3.7%* over the quarter, compared with the average return of 3.3% in the IA Mixed Investment 40-85% Shares Sector, its comparator benchmark.

	1m	3m	6m	YTD	1yr	3yr	5yr	Since inception
Liontrust Balanced C Acc	0.5%	3.7%	12.1%	14.9%	14.9%	56.6%	40.8%	203.6%
IA Mixed Investment 40-85% Shares	0.4%	3.3%	8.8%	11.6%	11.6%	31.4%	31.2%	134.2%
Quartile	2	2	1	1	1	1	2	1

Commentary

Market backdrop

Global equity markets continued their upward trajectory, supported by strong corporate earnings and a more accommodative monetary policy stance from major central banks. Leadership shifted away from US mega‑caps and toward European and broader international markets.

The MSCI World Index rose 3.2% in US dollar terms, while the MSCI World ex‑US gained 5.3%, marking a significant broadening of global equity market participation.

Emerging markets outperformed developed peers over the quarter (+4.8%) and strongly for the year, supported by a weaker US dollar and a resilient global economy.

Japan performed strongly with the Nikkei 225 up 12%, driven by tech sector strength and supportive government policy. Asian markets overall performed strongly as China saw a rebound in technology stocks, aided by domestic stimulus and improving trade relations with the US, while South Korea extended its gains.

In the US, equity performance was more muted. Sector rotation favoured financials over defensives such as utilities and real estate. Macroeconomic data indicated moderating inflation and softer labour conditions, reinforcing expectations of a soft landing following the Fed’s dovish pivot. The Federal Reserve delivered its second and third rate cuts of 2025, lowering the target range to 3.50–3.75%.

Europe performed well, supported by easing inflation and a Bank of England rate cut.

Although yield curves continued to steepen during the quarter, government bonds generated solid positive returns, particularly at the short end – supported by further rate cuts from the US Federal Reserve. Mirroring the pattern in equities, emerging market bonds outperformed developed counterparts.

Commodities were mixed: oil prices remained weak, but gold advanced 13%, capping a year of exceptional performance driven by safe‑haven demand.

Overall, the global investment backdrop reflected stabilizing inflation, ongoing monetary easing across major Western central banks, a weaker dollar, and improved breadth in global equity participation.

Portfolio review

Micron Technology’s (+71%) quarterly results included better-than-expected revenue as the memory chip-maker experienced a continuation of high AI-related demand. The company flagged that the supply/demand imbalance is likely to persist for some time, benefitting pricing.

Other key contributors included Alphabet (+29%), re-ratingon strong advertising trends and ongoing margin expansion, Expedia (+33%), following strong bookings and renewed cost discipline and Barrick Mining (+34%), which benefitted from gold price strength and operational improvements.

Detractors included BayCurrent Consulting (-30%) which fell in early October on what appeared to be profit-taking. Alibaba (-18%), following a 110% rally to end September, declined in Q4, driven by some renewed investor caution over China’s regulatory environment and geopolitical risks. Uber (-17%) also fell on profit-taking and concerns over mobility pricing weighed on performance.

With over 70% exposure to equities, the Fund’s asset allocation had a small positive attribution impact in Q4 as equities modestly outpaced gains within bond markets.

Portfolio Changes

We added a new position in Marvell after 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 over results season, this has given us renewed confidence in Marvell’s ability to exceed current market estimates for growth.

We bought M3, a leading healthcare platform company offering comprehensive medical-related services primarily to physicians and healthcare professionals via the internet. Growth is structurally driven by the global digitisation of healthcare, and we believe that ongoing investments in AI-enabled platforms, cloud-based services, and international expansion will underpin strong long-term revenue growth. In addition, the company continues to target strategic acquisitions and partnerships, particularly in digital health and clinical trial technology, which should further support enhanced value creation in our view.

The portfolio’s materials sector exposure was lifted during the quartet through the addition of Capstone Copper and Freeport-McMoRan. Copper demand/supply is expected to remain very tight, leading to the expectations of continued upside price pressure; both companies offer greater portfolio exposure to copper.

Outlook

We enter 2026 with a constructive but balanced view. Global equities ended 2025 on strong footing, supported by easing inflation, clearer monetary policy direction and broadening market participation outside the US mega‑cap complex. December data reinforced expectations of a soft landing, with moderating inflation and cooling labour conditions across major developed markets.

Key thematic drivers for the year ahead include:

AI diffusion beyond mega‑caps, favouring semiconductor supply chains, automation, and software platforms that enable operational productivity.
European and Japanese cyclicals, which continue to benefit from supportive monetary and fiscal dynamics and improving economic visibility.
Emerging market leadership, particularly as the MSCI World ex‑US and EM indices outperformed in December and throughout 2025 on dollar weakness and stronger local growth momentum.
Commodity and defence‑related demand, supported by heightened geopolitical risk and shifting global industrial policy.

We remain mindful of risks heading into early 2026, including policy divergence across central banks, geopolitical uncertainties, and potential volatility as investors recalibrate expectations for rate‑cut velocity and corporate earnings growth. Nonetheless, with broadening equity leadership and improved global macro stability, we believe the environment remains highly conducive to active, globally diversified stock selection.

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

	Dec-25	Dec-24	Dec-23	Dec-22	Dec-21
Liontrust Balanced C Acc	14.9%	13.2%	20.4%	-22.9%	16.5%
IA Mixed Investment 40-85% Shares	11.6%	9.0%	8.1%	-10.0%	10.9%
Quartile	1	1	1	4	1

* Source: FE Analytics, as at 31.12.25, total return, net of fees and income reinvested.

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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.
Bonds are affected by changes in interest rates and their value and the income they generate can rise or fall as a result;
The creditworthiness of a bond issuer may also affect that bond's value. Bonds that produce a higher level of income usually also carry greater risk as such bond issuers (high yield) may have difficulty in paying their debts. The value of a bond would be significantly affected if the issuer either refused to pay or was unable to pay.
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. The Fund invests in a diversified defensive securities strategy.
Credit Counterparty Risk: the Fund uses derivative instruments that may result in higher cash levels. Outside of normal conditions, the Fund may choose to hold higher levels of cash. Cash may be deposited with several credit counterparties (e.g. international banks) or in shortdated bonds. A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
Liquidity Risk: the Fund may 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.
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.