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Key takeaways
- European equities rose despite geopolitical volatility, with strength in IT, utilities and energy, while consumer discretionary and communication services lagged.
- The Fund underperformed the benchmark, as the long book lagged and the short book also detracted in relative terms amid rising markets.
- ASML, Wärtsilä and ArcelorMittal were notable contributors, while key detractors included Betsson, Microsoft and AB Foods.
Performance
The Fund’s A4 share class returned 1.0%* in euro terms in January. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned 3.1% and 2.1% respectively.
Commentary
January was marked by heightened geopolitical uncertainty, most notably following President Trump’s remarks suggesting a US ambition to acquire Greenland. These comments briefly unsettled markets, with eurozone equities coming under pressure mid-month amid concerns over potential tariffs and even military intervention. Sentiment subsequently improved as rhetoric cooled and the US, alongside its NATO allies, pivoted towards dialogue focused on Arctic security cooperation.
Despite the backdrop of geopolitical volatility, European equities posted positive returns over the month. Information technology (+10%), utilities (+8.1%) and energy (+6.6%) were the strongest-performing sectors, while consumer discretionary (-7.8%) and communication services (-0.9%) lagged. Within information technology, gains were led by semiconductor stocks, supported by a number of well-received earnings announcements, whereas software stocks underperformed their peers.
Performance over the period was driven by weakness in both sides of the book relative to the benchmark. The long book (c.107% of NAV) underperformed the benchmark, detracting from relative returns. In addition, the short book (c.32% of NAV) generated a positive absolute return as markets rose, also weighing on performance in relative terms, further contributing to the Fund’s underperformance versus the benchmark.
ASML (+32%) led the long book’s top performers, supported by its exposure to accelerating AI-driven semiconductor demand, which is driving increased capital investment across the industry. This was reinforced by strong order momentum, signalling sustained customer spending and improved revenue visibility, while guidance for significantly higher 2026 net sales (€34 billion-€39 billion), ahead of consensus expectations, further underpinned sentiment. In addition, positive analyst commentary and upgrades highlighted ASML’s dominant competitive position and long-term growth potential, providing further support to the share price.
Wärtsilä (+13%) delivered strong performance over the period, supported by positive order newsflow across its marine and energy businesses. A series of new contract wins and customer engagements, including engine selections and long-term service agreements, pointed to improving demand and strengthened revenue visibility, helping to underpin investor confidence and drive the share price higher.
ArcelorMittal’s (+18%) share price strength appears to reflect continued positive sentiment following last year’s announcement of EU tariffs on steel imports, which are expected to improve market supply–demand dynamics and support pricing.
Long book detractors included Betsson (-31%), which reported preliminary fourth-quarter revenue of €304 million, marginally lower than the €307 million recorded in the same period last year. Operating income declined more sharply to €53 million from €70 million in Q4 2024, reflecting the impact of higher gaming taxes and increased personnel costs on profitability.
Management noted that the performance continues to reflect a shift in the group’s revenue mix, with regulated markets accounting for a record 68% of total revenue, up from 60% in the prior-year period.
Microsoft (-12%) shares fell after the company reported record levels of investment alongside a slight slowdown in cloud sales growth, raising concerns that returns from its AI spending may take longer to materialise. Capital expenditure reached $37.5 billion in the fiscal second quarter, up 66% year on year and above expectations, reflecting continued heavy investment in AI infrastructure.
A key driver of ABF’s (-9.8%) share price weakness was a disappointing trading update, which highlighted weaker-than-expected sales at its Primark retail business alongside softer performance in parts of the food division. As a result, the company guided that group profit and earnings per share would fall year on year, prompting analyst downgrades and weighing on investor sentiment.
Discrete years' performance (%) to previous quarter-end**:
| Dec-25 | Dec-24 | Dec-23 | Dec-22 | Dec-21 |
Liontrust GF European Strategic Equity A4 Acc EUR | 4.1% | 18.5% | 1.4% | 18.3% | 32.9% |
MSCI Europe | 19.4% | 8.6% | 15.8% | -9.5 | 25.1% |
HFRX Equity Hedge EUR | 7.8% | 6.2% | 4.7% | -5.2% | 11.0% |
| Dec-20 | Dec-19 | Dec-18 | Dec-17 | Dec-16 |
Liontrust GF European Strategic Equity A4 Acc EUR | -10.0% | 23.2% | -7.1% | 4.2% | 4.8% |
MSCI Europe | -3.3% | 26.0% | -10.6% | 10.2% | 2.6% |
HFRX Equity Hedge EUR | 2.9% | 8.5% | -12.3% | 7.8% | -1.7% |
*Source: Financial Express, as at 31.01.26, total return (income reinvested and net of fees).
**Source: Financial Express, as at 31.12.25, total return (income reinvested and net of fees). Investment decisions should not be based on short-term performance.
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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.
- The Fund will 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’s volatility limits are calculated using the Value at Risk (VaR) methodology. In high interest rate environments the Fund’s implied volatility limits may rise resulting in a higher risk indicator score. The higher score does not necessarily mean the Fund is more risky and is potentially a result of overall market conditions.
- 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 encounter liquidity constraints from time to time. The spread between the price you buy and sell shares 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.
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