Coronavirus ii ACE 30 update: Liontrust SF European Growth Fund

interactive investor's analysts bring you an urgent update on this ii ACE 30 rated ethical investment.

The coronavirus outbreak and subsequent pandemic have had a significant impact on the global economy and financial markets. Many share and fund prices have fallen sharply in a very short space of time, as has the cost of oil and other commodities. Volatility has reached levels not seen since the peak of the financial crisis in 2008, and many assets remain prone to sharp movements both up and down.

Given these unprecedented circumstances, with citizens in many of the world’s largest cities confined to their homes, we are collecting updates from managers of funds on the ii ACE 30 rated list of ethical investments. 

• Want to invest ethically? ii’s ACE 30 list of ethical investments can help
• Find out why this fund is on the ii ACE 30 investments list

Here is the latest from the Liontrust Sustainable Investments Team on 30 March. 

Liontrust Sustainable Future (SF) European Growth Fund

“Last week was a better one for markets as more co-ordinated action from governments and central banks reduced some of the very high levels of volatility seen in previous weeks. 

“In varying degrees, lockdown is now estimated to cover 1/3 of the world’s population and the debate is evolving to include managing the economic shock long term alongside the need to save lives short term. Central bank and government action have been key in bringing some visibility to those potential outcomes but much is still unknown.

“Our investors will be familiar with the 20 long-term Sustainable Investment themes that underpin our investment process. These identify areas of the economy that are growing while making our lives cleaner, healthier and safer. Our themes have been part of our approach over nearly 20 years and have stood our funds in good stead through both economic shocks and more placid times. 

“The terrible impact from Covid-19 on our health, livelihoods and economies does not change our view that it is companies exposed to these themes which will see strong growth in coming years. Indeed, longer term we can expect investment in areas such as healthcare to be prioritised.

“Within the team we have been working through scenarios around the impact of Corona on each of our holdings to assess the impact on 2020 revenues, the ability of the balance sheet to withstand it, and tentatively what the likely earnings of the company will be in two to three years. There are many unknowns – in particular how governments will intervene - but it does highlight stocks which are beginning to look compelling longer term.

“While we remain cautious on any major trading with such low visibility on future earnings, we continue to look for opportunities. 

“Our company meetings and news flow remain cautiously positive overall. Some examples include the news from Befesa that they have been able to re-open construction on their China plants. 

“We have benefited from having no exposure to hard-hit sectors such as oil, airlines and hotels while our stock specific names continue to benefit from being high-quality companies exposed to a range of structural growth themes.   

“At the margin, we have reduced our defensive names that have been so strong year to date and have topped up some names that are positioned well for the next five years. This has included reducing Roche and adding small amounts to Puma.

“We currently have no concerns about liquidity and being able to meet individual client redemptions.”

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