With the Diamond Jubilee and the Olympics fixing the limelight firmly on London this year, backing British companies seems patriotic. However, with the recession battering many British-based firms, achieving decent returns can be tough. So the “star performance” of the Liontrust Special Situations Fund looks all the more impressive, says Katie Morley in the Investors Chronicle.
The fund has returned 30% over one year and 81.9% over three. But the best could be yet to come. If you want to “cash in on recent weakness in the stockmarkets, now is the time to invest”, notes Morley. Managers Anthony Cross and Julian Fosh look for companies that should be “robust performers in a low-growth environment”.
These firms operate in sectors with high barriers to competition, and enjoy strong intellectual property protection and high pricing power – as Fosh and Cross put it: “intangible strengths that competitors struggle to reproduce”.
As Cross notes on Liontrust’s blog, they will invest in firms facing temporary headwinds as long as they have these other qualities. Domino’s Pizza and Wilmington, both facing tough trading conditions, are two such examples. Other holdings include BP and Diageo.
The fund could also benefit from increased takeover activity. IT services provider Tikit, for example, recently received an offer from BT. Up to 30% of the fund is invested in potentially risky small-cap companies and it also has a relatively high annual management fee of 1.75%. However, investors may sleep better at night knowing that both managers have their own pensions invested in the fund.
Contact: 020-7412 1777.
Liontrust Special Situations top ten holdings
| Name of holding | % of assets |
|---|---|
| Diageo | 4.06% |
| GlaxoSmithKline | 3.97% |
| Unilever | 3.94% |
| Compass Group | 3.93% |
| BP | 3.90% |
| Royal Dutch Shell | 3.78% |
| AstraZeneca | 3.27% |
| BG Group | 3.14% |
| Reed Elsevier | 2.72% |
| Intertek | 2.71% |