| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | -4.4% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| -4.4% | 2.5% | 5.7% | -12.3% | 19.3% | -1.4% |
The Liontrust GF Special Situations Fund returned -1.5% in December versus the FTSE All-Share's 2.2% gain, concluding a challenging 2025 for Quality growth investors. Adverse stylistic headwinds persisted as the UK market favored Value sectors like Basic Resources (+19.7%) and Banks (+17.6%) over small and mid-cap Quality stocks. Despite disappointing share price performance, the Fund's high-quality compounders delivered reliable underlying trading, evidenced by superior financial metrics including 16.3% cash flow return on invested capital and 19.7% operating margins. Extreme valuation compression has left companies trading at a 26% discount to historic averages, with weighted average free cash flow yield over 8% - cheaper than the wider UK market despite higher quality characteristics. The portfolio has only looked cheaper during the 2008/2009 Global Financial Crisis. With macro conditions increasingly supportive through controlled inflation and declining interest rates, the managers remain optimistic that a rotation back to Quality leadership is inevitable, maintaining conviction in their high-quality compounders while avoiding style drift.
The Fund owns a portfolio of high-quality compounders trading at extreme discounts to historic valuations despite delivering reliable underlying performance, positioning for an inevitable rotation back to Quality leadership.
We are optimistic that a change in fortunes for Quality investors is a matter of when, not if, and we look to the future excited about the opportunity. The case is strongly building for a rotation of market leadership back to Quality.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | AJB.L, COA.L, DGE.L, NXT.L | compounders, Quality, rates, small caps, Uk, value |
BIG LN AJB LN IHP LN |
The Fund focuses on high-quality compounders with superior financial metrics including 16.3% cash flow return on invested capital, 19.7% operating margins, and low leverage. Despite reliable underlying trading performance, these quality stocks have experienced extreme valuation compression, trading at 26% discount to historic averages. Quality companies are trading at significant discounts with weighted average free cash flow yield over 8%, cheaper than the wider UK market despite superior characteristics. The portfolio looks cheaper than any time except the Global Financial Crisis of 2008/2009. |
| Nov 17 2025 | 2025 Q3 | AZN, BIG LN, DATA LN, GSK, NFG LN, QLT LN, RELX, WEIR LN, YOU LN | catalysts, earnings, inflation, rates, UKequities | - | UK equities benefited from stronger earnings, moderating inflation, and expectations of lower interest rates, supporting broad market gains. The fund highlights bottom-up catalysts such as portfolio simplification, drug-pipeline growth, and takeover speculation driving individual stock performance. UK equities remain attractive where structural advantages and operational upgrades can unlock value despite macro uncertainty. |
| Jul 16 2025 | 2025 Q2 | 002292 CH, AJB LN, AZN, BNZL LN, BP, MAB1 LN, RWS LN, SHELL LN, SXS LN | catalysts, Quality, Restructuring, specialsituations, UKequities | - | The strategy focuses on differentiated UK equities with structural competitive advantages, strong balance sheets, and self-help catalysts. The fund targets opportunities where operational improvements, reinvestment, or portfolio simplification can unlock long-term value. Special situations continue to offer alpha through disciplined bottom-up selection amid UK market inefficiencies. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
UK |
|
| 2025 Q2 |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 15, 2026 | Fund Letters | Anthony Cross | BIG LN | Big Technologies plc | Industrials | Commercial Services & Supplies | Bull | New York Stock Exchange | Electronic Monitoring, international expansion, product innovation, Public safety, Recurring Contracts | Login |
| Jan 15, 2026 | Fund Letters | Anthony Cross | AJB LN | AJ Bell plc | Financials | Capital Markets | Bear | New York Stock Exchange | Investment Platforms, margin pressure, Marketing Spend, Net Inflows, Retail Investing | Login |
| Jan 15, 2026 | Fund Letters | Anthony Cross | IHP LN | IntegraFin Holdings plc | Financials | Capital Markets | Bull | New York Stock Exchange | Adviser Networks, Assets Under Administration, Investment Platforms, operating leverage, recurring revenue | Login |
| TICKER | COMMENTARY |
|---|---|
| AJB.L | We initiated two new positions during the year—Greggs and AJ Bell, whilst reducing our exposure to NEXT and Compass Group; and selling out of AutoZone entirely during September. |
| COA.L | Coats Group (+4.6%) |
| DGE.L | Diageo represents one of the clearest examples of brands crystallising into cornered resources. Its leading spirits brands are reinforced by production realities that competitors cannot accelerate, most notably long-dated ageing inventories and protected geographic areas of distribution. A rival can copy a label, but it cannot replicate decades of maturing whisky stock or compress centuries of brand heritage into a marketing cycle. This combination of time-based scarcity and cultural embeddedness gives Diageo durable pricing power that is unusually resilient through economic cycles. In Helmer's terms, the brand ceases to be merely persuasive and instead becomes an independently owned, scarce asset that underpins long-term returns on capital. That said, recent demand following a Covid-led surge has softened, particularly in South America. It will be the job of Sir Dave Lewis—the former Tesco turnaround CEO, to reintroduce a greater cost discipline across the business and ensure their leading global brands are well positioned for the evolving landscape of consumer tastes. |
| NXT.L | We initiated two new positions during the year—Greggs and AJ Bell, whilst reducing our exposure to NEXT and Compass Group; and selling out of AutoZone entirely during September. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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