Liontrust Sustainable Investment Annual Review 2023 - Flipbook - Page 4
Sustainable Future funds
performance – 2023
Despite ongoing geopolitical uncertainty and conflict, overall, 2023
was a calmer and more typical year for markets and investors, with
signs of positive sentiment in a number of areas.
Our range of funds all saw positive returns over the year, with
many outperforming the benchmark index against which they are
measured.
Fund
Year end returns
Sustainable Future Managed Growth 2
15.4%
Sustainable Future Global Growth
15.2%
Sustainable Future Monthly Income Bond*
13.1%
Sustainable Future Corporate Bond*
13.0%
Sustainable Future Managed 2
11.8%
Sustainable Future Cautious Managed 2
8.9%
Sustainable Future Defensive Managed
8.2%
Sustainable Future European Growth 2
6.7%
Sustainable Future UK Growth 2
5.0%
UK Ethical 2 Acc
3.6%
Source: Liontrust, 31 December 2023.
Past performance does not predict future returns. You may
get back less than you originally invested. Please refer to the
Key Risks for more information.
4 - Liontrust Sustainable Investment: Annual Review 2023
There were headwinds in 2023 due to the market reaction to the
‘higher for longer’ interest rates message from the US Federal Reserve,
which impacts the cost of capital across the world. The resulting rise
in interest rate expectations, and therefore discount rates, impacted
all asset classes, but particularly the growth and quality companies
that we believe are tackling the world’s most challenging problems.
We believe interest rates are at peak levels and inflation should
fall towards central banks’ targets by mid to late 2024. The current
higher interest rate environment will likely lead to lower economic
growth, resulting in early cuts in interest rates.
Given this view and the fact that interest rate rises were the primary
catalyst for the sell-off in the long duration growth equities in which we
invest, we should expect that the valuation multiples applied to growth
equities should stabilise in conjunction with the peak in interest rates.
This would remove a significant structural headwind against returns.
One key theme last year negatively impacting some of our healthcare
and consumer companies was destocking. Covid-19 supply chain
disruptions induced many companies to over order and build up very
large inventories to ensure they wouldn’t run
out of inputs. As Covid diminished
and supply chains normalised,
companies began running
down these inventories
back to normal