Liontrust GF Global Alpha Long Short Fund

Q2 2025 review
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.
  • Global equity markets sold off sharply in April following ‘Liberation Day’ in the US but quickly reversed the losses amid easing trade tensions, and a calmer geopolitical environment which allowed investors to focus on robust earnings.
  • Growth decisively outpaced value as technology and communication stocks led the rally globally while healthcare and energy lagged.
  • AI infrastructure, financial services and defence spending among the best performing strategies as long book gains drive Fund performance.

The Liontrust GF Global Alpha Long Short Fund returned 10.4%* in US dollar terms over the quarter, compared with the 1.0% return of the Secured Overnight Financing Rate reference benchmark and the 4.1% return of the HFRX Equity Hedge (USD) Index, also a reference benchmark.

Market backdrop

Global markets were shaken by President Trump’s ‘Liberation Day’ set of tariffs, set at higher levels and more broadly than had been expected. However, trade tensions eased as the majority of these tariffs were put on pause pending negotiations, and markets rallied strongly through May and June. 

The S&P 500’s 6.2% US dollar terms bounce in May was the strongest monthly performance since November 2023. This took the US Q2 return to 10.8%, but there was also strong performance elsewhere including Europe (+12%), Japan (+18%), and emerging markets (+12%). Korea was especially strong, up 35% following a positive election outcome. European markets are outshining the US so far in 2025; Germany’s DAX has risen a record breaking 35.9% in the first half of 2025.

The US dominated MSCI All Country World index saw a reasonably broad-based rally over the quarter, although, in a familiar pattern from the last couple of years, it was technology (+23%) which led the rise, followed by communications services (+18%).

Growth and technology stocks were boosted by the prospect of up to two rate cuts in the US before year end, driving longer-duration growth names to rally. However, within technology, there was evidence of broadening out of market leadership, with the Magnificent Seven dominance showing signs of waning. While Nvidia (+44%) Netflix (+43%), Microsoft (+32%) meaningfully outperformed over the quarter, returns from the other Mag7 constituents were more disparate. In fact, Apple, Tesla and Alphabet’s year-to-date returns are now a disappointing -18%, -21% and -7% respectively.

Healthcare declined in Q2 (-3.5%), led lower by regulatory concerns and company-specific (UnitedHealth) challenges, while energy (-3.6%) also posted a negative return, tracking commodity prices lower as fears over global trade frictions outweighed the potential supply disruptions from Middle East instability.

Portfolio review

The long book contributed 18.9% to portfolio returns whilst the short book detracted 6.9% in the quarter. This was a pleasing performance overall given the backdrop of a strong equity market.

The best performing strategies over the quarter included AI infrastructure, financial services and defence spending.

On the negative side of attribution, the mobility and crypto baskets dragged on performance. In mobility, the short in a US EV maker was the main negative. However, T-Scoring drove a reduction in the position size – thus mitigating a worse outcome. In crypto, it was our net short position in a rallying market that was the drag – the Fund is long industry leader Coinbase (+104% over the quarter) and short some of the miners.

Portfolio changes

  • AI Infrastructure: the long position in Seagate Technology (+70% in US dollar terms) led this basket’s performance as the shares surged on strong Q1 results and a successful analyst day which led to significant upgrades to earnings forecasts. T-Scores led the risk management of this position, allowing the Fund to move to a very high conviction level, adding to the position both ahead and after the meeting.
  • Defence spending: we are net long a basket of defence names which continue to benefit from heightened geopolitical risks and the increasing pressure on governments to increase defence budgets.
  • Financial services: on the long side Plus500 (+31%) and Robinhood Markets (+104%) performed strongly, balanced by a drag from a short asset manager which rallied on low quality corporate news.
  • AI Infrastructure: we removed Cadence and Monolithic on the short side. We trimmed the position in Seagate towards the end of the month given its significant rally but continue to own the name, viewing the fundamental story as compelling with a still undemanding valuation. We also added a new short in Western Digital as a partial hedge for the large Seagate position that rose to a >5% position by month end.

We also initiated a position in Atlassian, a company we have owned in the past. Atlassian has enjoyed continued strong cloud migration and growth as well as making strong progress on its AI platform, which has become stickier, added more value, and extended its reach across every team in the enterprise. Our intrinsic valuation suggests over 30% upside to the current share price.

  • Consumer: We removed Amazon as a long hedge and took off the Etsy short, adding to the Ocado short. We also added an Indian holding – Eternal – increasing portfolio diversification into this high growth Indian quick commerce name.
  • Fintech: we reduced the net long by adding on the short side to an insuretech name based on accounting concerns whilst also selling the Upstart long.
  • Mobility: we moved from flat to net long upon reducing the short in a US EV manufacturer. Given the easing of China/US trade tensions and a valuation still at a significant discount to global peers, we added to our position in leading EV carmaker BYD.

Outlook

Global geo-political risk is high, led by a US administration that is putting America first. This creates a backdrop that requires a much more careful assessment of risk versus reward. We believe that risk-adjusted returns will be front and centre of investors’ minds running through the second half of the year.

Thematically, we remain positive on the potential for AI to drive significant benefits across all industries and continue to work on identifying winners.

We have waited patiently for the crypto world to unfold and the IPO of Circle Internet could act as a Chat GPT moment for Stablecoins. This will benefit the entire blockchain/crypto supply chain and – together with fintech – remains a key theme for the rest of this year. 

Our base case is that equity markets globally remain little changed in the second half of the year, but that the polarisation of winners and losers will remain significant.  In this environment, overall market returns will be less important and, for the first time in many years, stock selection outside the very biggest companies in the world will matter, as will geographical diversification.

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

 

Jun-25

Jun-24

Jun-23

Jun-22

Jun-21

Liontrust GF Global Alpha Long Short B8 Acc USD

13.6%

20.1%

-10.2%

-3.5%

45.8%

FRB of New York Secured Overnight Financial Rate

4.7%

5.3%

 3.8%

0.2%

  
0.1%

HFRX Equity Hedge

7.0%

9.1%

4.6%

-0.9%

20.4%

Source: FE Analytics, as at 30.06.25, 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.

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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, 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.
  • Emerging Market Risk: the Fund may invest in emerging markets which carries a higher risk than investment in more developed countries. This may result in higher volatility and larger drops in the value of the fund over the short term.
  • 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.
  • Sanctions: Certain countries, including China, have a higher risk of the imposition of financial and economic sanctions on them which may have a significant economic impact on any company operating, or based, in these countries and their ability to trade as normal. Any such sanctions may cause the value of the investments in the fund to fall significantly and may result in liquidity issues which could prevent the fund from meeting redemptions.

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.

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