Liontrust Multi-Asset Quarter in Review - Flipbook - Page 20
MPS Growth
Another difficult three months for markets saw most of our holdings
in negative territory, with concerns around potential recession in
a rising interest rate environment and ongoing war in Ukraine
weighing on sentiment.
Fixed income would usually be expected to provide defensive ballast
during equity sell-offs but bonds have not only become correlated
with shares in the short term, their performance has actually been
worse, particularly in the UK. A rising rate environment is clearly
difficult for this asset class, and our funds across the fixed income
spectrum struggled over the period; lack of bond exposure was
therefore a relative positive for our higher-risk models.
While our long-term call to be overweight value was positive on
a relative basis, it was more than offset by weaker returns from
growth, quality and particularly small-cap positions, with Artemis
US Smaller Companies, Baring Europe Select and Janus UK
Smaller Companies among the worst performers over the quarter.
As ever, fears of imminent recession are having a greater impact on
domestically focused small caps.
We added the Liontrust Diversified Real Assets Fund to the portfolio in Q1
and it has continued to feature among the better performers, providing
the uncorrelated returns and inflation protection we were seeking.
As highlighted earlier, we retain a lower duration position in our
bond allocation as central banks prevaricate over the timing and
extent of rate rises and tapering, and AXA US Short Duration High
Yield was among our better performers in Q2.
Another relative positive was the emerging markets exposure, which
had a better quarter than several other markets as Chinese equities
rallied on the back of authorities lifting the strict Covid lockdown
in Shanghai. This helped short-term relative performance for higherrisk models, which have considerable exposure to the region.
With the value rotation continuing, our equity holdings skewed
towards that end of the market were the top performers over the
period but even these struggled amid widespread volatility. Man
GLG Japan CoreAlpha was the strongest holding, followed by
familiar value-oriented names such as Fidelity Special Situations,
JPM US Equity Income, Schroder Asian Income and Schroder
Income.
While the Chinese index has climbed almost 19% since falling to a
trough in April, the outlook for the world’s second-largest economy
remains subdued and commentators are questioning whether the
rebound is a mean-reversion to pre-lockdown levels rather than a
sustainable rally. For now, however, funds including Artemis SmartGARP
Global Emerging Markets Equity and passive exposure via Fidelity
Index Emerging Markets were among our better performers.
20 - Liontrust Multi-Asset Funds and Portfolios Quarterly Report: Q2 2022