Liontrust Assessment of Value Report - Flipbook - Page 152
Liontrust US Income Fund
The Fund is managed by George Boyd-Bowman and aims to
generate capital growth over the long term (5 years or more).
The Fund invests at least 80% in shares of US companies. These
are companies which, at the time of purchase, are incorporated,
domiciled, listed or conduct significant business in the US. Stocks are
selected with a focus on income and the potential for capital growth.
Liontrust merged the Fund with the Liontrust Global Dividend Fund on
8 October 2021 following regulatory and shareholder approval.
Performance
Overall value
assessment
We have assessed the investment performance of the Fund against both its
stated investment objective, as well as against the benchmarks that are set out
in its prospectus. We considered whether the Fund has performed how we and
investors would expect it to, given the market conditions it has been operating
under, and its investment philosophy, strategy and process.
We have evaluated the Fund
against all seven criteria in
our assessment of the value
it provides to investors. We
have concluded that the
Fund has performed in line
with expectations, delivering
overall value to investors.
The Manager of the Fund was changed less than five years ago, the Fund has
met its Income targets over this period, but its performance versus the benchmark
and sector has struggled. Much of the performance of the US markets have been
driven by stocks with little or no dividends (such as technology stocks) and this
has meant the income focus of the Fund has held back its capital performance.
We have concluded that the Fund has broadly met investors’ expectations given
these constraints, providing a good income as well as capital growth. Following
a review of the Fund during the year, we concluded that investors would be
better served by having exposure to a global income portfolio and a merger
was voted through with the Liontrust Global Dividend Fund.
Go back to the Summary
of the Assessment of
Value table
Prior to its merger with the Liontrust Global Dividend Fund on 8 October 2021,
the Liontrust US Income Fund returned 77.0%, versus the S&P 500 Index and
IA North America (both comparator benchmarks) respective returns of 111.8%
and 106.0%.*
The Fund aimed to create a portfolio focused on the beneficiaries of
digitalisation but importantly doing so in a style conscious manner, building a
core portfolio. The manager implemented this belief by investing across three
different categories of digitalisation beneficiaries: the disruptors, which tend to
be growth orientated, and embracers and enablers of digitalisation which offer
a mix of growth, value and potentially more cyclical opportunities.
The US Income Fund peer group as a whole has struggled against the S&P 500
Index and wider US equity universe in recent times. The overriding reason for
this has been the strength of a handful of large and mega-cap technology stocks
which, aside from Microsoft and Apple (which the fund owned), do not pay
meaningful dividends, if any dividend at all.
The Liontrust US Income Fund did not employ a barbell approach to income
generation and therefore did not own non-yielding companies. The impact of
not being able to own these companies on the performance of the Fund was
significant with these shares experiencing huge price gains over the past five
years, driving a significant proportion of the returns for the Index.
This backdrop continued to be detrimental over the Covid-19 crisis which has
seen the secular trends that many of the large and mega-cap tech stocks benefit
from, including the shift to the cloud and e-commerce, only be accentuated.
It is for this reason that some underperformance on a total return basis was
expected, but the fund continued to deliver on its income objective.
This document is intended to be for information purposes only. It is not
marketing material.
*Source: Financial Express, as at 31.08.21, total return, net of fees, income reinvested.
152 - Liontrust Assessment of Value Report