The Fund lagged as large-cap value stocks led the market, but the outlook remains positive. Strong performers such as Oxford Biomedica, Kainos and Helios Towers highlight the portfolio’s quality-growth focus, while attractive valuations in UK mid and small caps support confidence in the strategy’s long-term prospects.
Peter [00:00:11] After an encouraging second quarter, we were anticipating continued momentum through the third quarter. However, in the event, the Fund lagged the MSCI UK and the peer group.
Peter [00:00:23] The market was led by large cap value-oriented stocks with banks in particular performing strongly. It's been a very peculiar period where large cap companies have outstripped the mid cap. Over the year, the FTSE 100 has delivered nearly 18%. The FTSE 250, the mid-cap index, has been more modest at just under 10%. Longer-term though, the faster-growing mid- cap has tended to outperform, and we expect this to revert in time. We believe the UK mid and small-cap segments are very attractively valued, while still offering strong growth. And this is where the Sustainable Future UK Growth Fund finds its best ideas. Those smaller companies that are growing while providing solutions to key challenges in health, environmental technology, and security.
Peter [00:01:18] Companies which performed well over the period were Oxford Biomedica, the cell and gene therapy manufacturing company. It's 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.
Peter [00:01:39] And I'd highlight Kainos, which delivered strong performance following an encouraging trading update, that positioned the technology consulting and software development company at the top end of market expectations. Kainos has seen strong growth from its Workday software products and also its work in increasing the shift to digital in the public sector.
Peter [00:02:00] Finally, Helios Towers delivered strong financial returns reinforcing the strength of its business model. It operates and builds new telecom towers in Africa and the Middle East. As they add mobile operators to each tower, so operational gearing comes through for the company.
Peter [00:02:18] On the negative side, we saw LSE Group, which suffered from the market sentiment that AI would challenge their business model. Our view is that specialist, regulated data providers such as LSE Group will be resilient and likely to be one of the beneficiaries of actually using AI to enhance productivity.
Peter [00:02:40] We focus on mid-cap quality growth companies that are benefiting from our diverse range of sustainable themes. Our analysis suggests that these will continue to deliver strong growth over the coming years, and yet companies linked to them are trading at significant valuation discounts to their historic average. For this reason, we believe the long-term prospects of the strategy remain strong.
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.
- All investments will be expected to conform to our social and environmental criteria.
- 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.
- The Fund may invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
- The Fund will 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.
- 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.
- Counterparty Risk: any derivative contract, including FX hedging, may be at risk if the counterparty fails.
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
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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.
