Fund Objective

The investment objective of Liontrust First Growth Fund is to provide long-term capital growth through investment in a portfolio of mainly UK equities, but with the option of investing part of the portfolio overseas.

View on Past Performance

The third quarter is usually a quiet time for company news. The little that has dribbled out on our stocks has been pretty good. I can see some pressure mounting in a few areas, but generally our companies look pretty robust and healthy.

Future Expectations

Commodity prices have come rattling back, taking mining and oil company stock prices with them. Fears of a global recession have taken the speculative froth from commodity prices. Oil, in particular, had galloped from $80 to $150 earlier this year, without any apparent cause, only to hurtle back down to $90.All the company specific evidence suggests supply is very tight for almost all industrial commodities. The debate, as far as expectations are concerned, is still about how far commodity prices will fall rather than whether they will rise. The key will be China, and the balance of its economy.Consensus expectations are betting that China will slump as its exports fall. Our investment in commodity stocks has been based on supply being surprisingly tight (still the case) and demand being structurally higher due to the infrastructure investment cycle in China (and other large emerging economies such as India). All the companies which are directly exposed to Chinese infrastructure spending still confirm strong demand.So, as yet, there is no evidence to undermine us. Commodity spot prices are partly determined by marginal demand and supply, partly by second guessing speculators, so they can't be relied on to give a clear signal at the moment. Hence we will have to wait some months more, for clearer evidence to emerge. For the moment our commodity investments remain.At the moment I am doing almost nothing to the portfolio. We have had only one company producing disappointing trading (Davis Service Group) and a couple where the cash flow is not as strong as I would like. We are selling these positions at the moment. There are a few new stocks I have my eye on, but I want to wait a month before buying. I am hoping (all one can do at the moment) that the extent of government interference in the markets will be clearer by then.

Fund Details