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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.
- Volatility and uncertainty spike after US tariffs announcement, with corporate newsflow often overshadowed by macroeconomic worries.
- Dunelm bucks trend of consumer discretionary sector weakness by reporting strong quarterly growth and maintaining financial guidance.
- Mycronic slid after cutting its 2025 sales guidance due to the impact of US trade tariffs.
The Fund’s A3 share class returned 2.1%* in euro terms in April. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned 1.8%.
Market volatility spiked in response to Donald Trump’s ‘Liberation Day’ tariff announcement, with an equity market rout in the first week followed by a steadier recovery through the remainder of the month after news of a 90-day pause on most tariffs.
The VIX index of implied volatility on the US market jumped from a little over 20% at the start of April to peak at 52% mid-month – a pattern reflective of investor activity and mood across global markets.
Given that most threatened tariffs remain on pause, it’s difficult to know what the ultimate policy outcome will be and how that will impact markets in the medium term. In the meantime, it is likely that market turbulence and volatility will continue.
We will only seek to analyse the impact of tariffs through the framework of our investment process, which in the first instance screens companies based on quantitative cash flow measures. The reverberations of this tariffs shock will, however, take time to manifest itself in our data.
While not evident at this point, if our data starts to point towards significant market dislocation then we will look to position the portfolio to reflect this. The investment process has a strong historic record of identifying such bouts and adjusting exposure accordingly.
With the outlook for global trade and growth weakening in light of the new tariffs, the oil price tumbled from around $75 a barrel at the start of the month to end April close to $63. The energy sector was easily the weakest in the MSCI Europe index over the month, falling 15% in euro terms, and there was further evidence of cyclical weakness as consumer discretionary (-3.2%) and materials (-0.8%) lost ground.
Over April, portfolio returns were reflective of an environment where macroeconomic and political uncertainty took prominence over corporate newsflow. There was also some sign of weak sentiment towards discretionary spending, with, for example, promotional products supplier 4imprint (-15%) and jewellery retailer Pandora (-7.8%) dropping without issuing trading updates. Equally, more defensive stocks such as support services contractor Serco (+9.2%) found support.
Bucking the trend of weakness in consumer discretionary was furniture retailer Dunelm (+22%). A trading statement revealed that in the first quarter of 2025 – Q3 of its fiscal year – it grew sales by 6.3% year-on-year. Dunelm commented that volume growth was broad-based across categories with a successful winter sale at the start of the quarter followed by a good start to its spring/summer ranges. Despite unchanged margin and sales guidance for the full year, the strength of trading led a number of brokers to upgrade profit forecasts for the year.
Mycronic (-9.4%) was one of the portfolio companies to attempt to quantify the impact of tariffs. The supplier of high-precision production equipment to the electronics industry has around 5% direct exposure to the 100%+ tariffs levied on Chinese goods by the US, as well as 5% - 10% exposure to the US base tariff rates. Although it recorded 27% growth in net sales in Q1 – ahead of expectations – it has cut its 2025 sales guidance from 7.5 billion krone to a range of 7.0 – 7.5 billion.
Positive contributors to performance included:
Dunelm (+22%), Serco (+9.2%) and Games Workshop Group (+8.3%).
Negative contributors to performance included:
4imprint (-15%), Mycronic (-9.4%) and Pandora (-7.8%).
Discrete years' performance (%) to previous quarter-end:
| Mar-25 | Mar-24 | Mar-23 | Mar-22 | Mar-21 |
Liontrust GF European Smaller Companies A3 Acc EUR | 2.7% | 16.4% | -2.6% | 7.9% | 70.2% |
MSCI Europe Small Cap | 3.4% | 10.2% | -9.1% | 1.9% | 61.2% |
| Mar-20 | Mar-19 | Mar-18 |
Liontrust GF European Smaller Companies A3 Acc EUR | -21.6% | -2.3% | -1.2% |
MSCI Europe Small Cap | -18.1% | -1.3% | 8.3% |
*Source: Financial Express, as at 30.04.25, total return (net of fees and income reinvested).
**Source: Financial Express, as at 31.03.25, total return (net of fees and income reinvested). Discrete data is not available for ten full 12-month periods due to the launch date of the portfolio (01.02.17). Investment decisions should not be based on short-term performance.
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.
