Highlights:
- The reward to business quality factors important to our approach was mixed with sales stability, an indicator of recurring revenues, underperforming in Q1 while high gross margins, an indicator of pricing power, outperformed.
- The largest contributors to Q1 performance were NVIDIA, Amazon, and Novo Nordisk; the largest detractors from returns were HDFC Bank, AIA Group, and Atlassian.
- Stock selection in the Financials sector was negatively affected by weakness in emerging markets and accounted for almost all of the portfolio’s relative performance shortfall for the quarter.
- We initiated a new position in LVMH.
- We trimmed positions in Infosys, NVIDIA, Novo Nordisk, Equinix, ICON, and Linde among others on strength and added to positions in HDFC Bank, MercadoLibre, and STERIS among others on weakness.
The opinions expressed herein reflect the opinions of Sustainable Growth Advisers, LP and are subject to change without notice. Past performance is no guarantee for future results. This information is supplemental and complements a GIPS Report that can be found with composite performance. The securities referenced in the article are not a solicitation or recommendation to buy, sell or hold securities. This commentary is provided only for qualified and sophisticated institutional investors.
Results are presented gross and net of management fees and include the reinvestment of all income. The Net Returns are calculated based upon the highest published fees. The net performance has been reduced by the amount of the highest published fee that may be charged to SGA clients, 0.85%, employing the Global Growth equity strategy during the period under consideration. Actual fees charged to clients may vary depending on, among other things, the applicable fees schedule and portfolio size. SGA’s fees are available upon request and also may be found in Part 2A of its Form ADV. The largest contributors and detractors are determined using a ranking of the absolute contribution to portfolio return by each security held over the period under consideration. Upon request, free of charge, SGA can provide a list of all portfolio holdings held in SGA’s Global Growth portfolio for the year. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request. SGA’s earnings growth forecast data is based upon portfolio companies’ Non-GAAP operating earning.