Liontrust Macro Equity Income Fund - Acc (R)

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Glossary

  • Fund

    A way for individual investors to pool their money together, allowing them to invest in assets that would otherwise be unobtainable

  • Fund manager

    The person who decides where the fund's money should be invested. As such, finding a talented manager (such as those with a Citywire rating) is of paramount importance

  • Sector

    Funds are grouped together into sectors, allowing fund managers to be judged against their benchmarks and peer group. Each sector has rules about what assets funds are allowed to invest in

  • Assets

    A generic term meaning 'what you own'. If you can buy it, it's an asset. In the world of investments the most common assets are shares, bonds, property and cash.

  • Asset class

    A group of assets with similar properties. For example, while shares will rise or fall in price individually, economic factors can affect all shares similarly. The same economic factors might affect bonds very differently – so shares and bonds are separate asset classes.

  • Asset allocation

    The process of deciding which asset classes to invest in. Successful asset allocation is often more important than selecting individual assets (for example deciding whether to invest mainly in shares, rather than which shares to invest in). Since most fund managers are tied to their sector rules, you need to either do your own asset allocation or buy a managed fund.

  • Benchmark

    A measure of how different areas of the markets are performing, against which funds can be compared. For example, a fund in the UK All Companies sector might be compared against the FTSE All-Share index of every company traded on the London Stock Exchange. A good fund manager will be able to beat the benchmark most of the time, but very few can.

  • Securities

    A contract representing something of financial value. Shares and bonds are the most common types of securities.

  • Managed funds

    Unlike most funds, which are restricted to investing in particular markets by the rules of their sector, managed funds can invest in just about anything. While they can have subtly different objectives, they are split into 'Active Managed', where the manager is given free reign; 'Balanced Managed', where the manager can invest a maximum of 85% in shares to reduce risk; and 'Cautious Managed' with a 60% maximum in shares.

  • Shares

    A share in a company represents part ownership of its assets (e.g. its buildings, intellectual property and so on) and its future income (paid out as dividends). The value of a share depends largely on other investors' expectations of the company's future growth and income.

  • Bonds

    Companies can issue bonds as a way of raising money. When you buy a bond, the company is agreeing to pay you a fixed income (hence the alternative name 'fixed income securities') for a certain time period, after which your money is repaid. If investors suspect a company may be unable to repay, they will demand a higher income or 'yield' - hence 'high yield bonds'.

  • Risk

    In investing, 'risk' can refer to different things, but essentially means the possibility that your objectives won't be met. In this context, risk is a calculation of the 'standard deviation' of returns each month – in otherwords, a measure of how rocky the returns are. The higher the rank, the less risk the fund takes with your money.

  • Sharpe Ratio

    This is a way of calculating 'risk adjusted returns' – i.e. how much value the fund is adding above the risk it takes to generate its returns. The higher the number the better.

  • Return

    A measure of how your investments have performed, relative to your initial investment. For example if you invest £1,000 in a fund, and a year later your investment is worth £1,100, you've made a 10% return.

  • Maximum loss

    Comparing the maximum loss for different managers (or between a manager and their benchmarks, as on these factsheets) over a given period is a good way of seeing who's doing the best job of safeguarding investors' money. Otherwise known as maximum 'drawdown', this is a measure of how much you would lose if you bought an investment at its most expensive and sold at its cheapest. For example if a fund was worth £1 a unit at one point but then fell to 50p – regardless of what happened in the meantime – the fund's loss would be 50%.

  • LATEST PRICE

    updated on 23/04/2014

  • £2.86
  • CHANGE IN PRICE

    from 22/04/2014

  • 0.15%
  • TOTAL RETURN

    over 3 years to 23/04/2014

  • 37.2%
  • Benchmark

    34.3%

Citywire Selection

Liontrust Macro Equity Income Fund - Acc (R)

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Ranked 55/104 in Equity - UK Equity Income over 1 month

TOTAL RETURN over 1 month to 23/04/2014

Key:

 Liontrust Macro Equity Income Fund - Acc (R)  Benchmark

Who runs this fund?

Fund Group

Liontrust

How Liontrust Macro Equity Income Fund - Acc (R) compares to the sector over

How has Liontrust Macro Equity Income Fund - Acc (R) performed?

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How Liontrust Macro Equity Income Fund - Acc (R) compares to the sector over

Sectors: What is this fund investing in? Updated 28-02-2014

Top 10 holdings Updated 28-02-2014

News about: Liontrust Macro Equity Income Fund - Acc (R)

  • Fund information

    • Launch Date 31 Oct 2003
    • Share Class size £46.9m
    • Base Currency GBP
    • ISIN GB0033726984
  • Purchase Info

    • Minimum initial investment £100000
    • Minimum additional investment N/A
  • Charges

    • Annual management charge1.5%
    • Initial charge5%

Liontrust Macro Equity Income Fund - Acc (R)

Liontrust’s Luthman and Bailey sell consumer staples and eye ‘challenger banks’ to ride recovery

Liontrust Macro Equity Income  managers Jan Luthman and Stephen Bailey have sold out of their consumer staple stocks on the view that valuations in the sector are unjustified.

They began to sell their positions in the first quarter of the year, starting with US names PepsiCo and Kimberly-Clark. They sold out of UK companies such as Unilever and Reckitt Benckiser at the end of the summer.

Luthman and Bailey told Citywire: ‘We saw headwinds in the first quarter when Warren Buffett bought Heinz. We took this as a warning sign in the sector and sold out of Heinz, which initiated the process of selling our other consumer staple stocks.’

Asset Managers

With a recovery in the UK economy well under way, Luthman and Bailey have shifted their focus and are now exposed to a selection of asset managers including Aberdeen, Jupiter and Henderson.

They said: ‘We had enough cyclical stocks so asset managers are reasonable to have for a recovery.’

They bought Henderson in July 2012 when the company was still digesting its Gartmore acquisition, and it has since more than doubled in price.

Luthman said: ‘At the time, Henderson was the ugly duckling of the sector and most analysts had sell notes, but we saw prospects in its ability to grow its funds under management. Henderson has gone from a deficit to going to cash-positive with a higher payout ratio.’

'Challenger' Banks

Commenting on banks, the managers said: ‘This country cannot afford another bank bailout. In banks, prudence is absolute and non-negotiable and our concern is that banks are expanding their lending without having the underlying funds.’ As a result, they prefer the smaller ‘challenger banks’. The duo have bought Sainsbury’s, whose banking arm cross-sells to 3% of its customers.

 

‘Sainsbury’s is increasing its market share and has the potential to be huge. Buying out Lloyds’ 50% stake in Sainsbury’s bank resulted in Sainsbury’s having full control of the business.’

They acknowledge it is hard to invest in challenger banks, but they see huge potential, especially with the mortgage guarantee scheme taking effect in the New Year. From January, challenger bank involvement is expected to be more visible. They are particularly keen on specialist lender Paragon, which is derisking its current mortgage portfolio and applying for a retail banking licence. Luthman and Bailey explained: ‘The rise in the number and size of challenger banks will make life more difficult for incumbents and this will benefit the fund.’

Bullish on Pharma

Elsewhere, they remain bullish on the pharmaceutical sector. ‘Businesses are shedding themselves of excess baggage and re-inventing themselves. They are now going back to their core innovative values.’

An example of this is their holding in Bristol-Myers, which is the first company to dispose of its non-core businesses. Bristol-Myers disposed of its infant nutrition business and is now concentrating its efforts on oncology, which is its core business. Luthman said: ‘Investors have started to recognise Bristol-Myers as a growth stock and Bristol-Myers is now on 34 times earnings. We have not seen this level since the turn of the century.’

The managers also see a similar approach in Novartis, which wants to dispose of its consumer businesses.

Luthman and Bailey are celebrating their 10th anniversary at the helm of the fund. Over 10 years to the end of October, the fund returned 204%, compared with the FTSE 350 Higher Yield return of 114.9%

Citywire Selection Verdict:  Jan Luthman and Stephen Bailey are among the sector’s best long-term performers. Offering a healthy yield, the fund is well positioned to reap opportunities within volatile markets. Unlike many peers, they do not hold utilities or tobacco stocks, and focus on macro thematic issues rather than stock specifics. The duo remain bullish on pharmaceutical companies, where they have large stakes. Over the long term, the defensive fund demonstrates its ability to outperform rising and falling markets.

For more details view the latest fund factsheet .

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