- SGA’s Emerging Markets portfolio returned -1.0% (gross) and -1.3% (net) in Q3 2018 compared to -1.1% for its primary benchmark the MSCI Emerging Markets Index; during the same period the MSCI Emerging Markets Growth Index returned -5.4% and the MSCI ACWI with EM Exposure Index returned -2.6%
- Emerging markets trailed developed markets by a wide margin on concerns tied to rising interest rates, reduced liquidity, currency issues, rising oil prices and trade tariffs
- Larger cap value stocks with more debt, low returns on equity and no earnings outperformed; market backdrop a headwind for our approach
- The Energy sector led the Index by a wide margin, followed by Materials and Industrials, while the Consumer Discretionary and Health Care sectors performed worst
- The portfolio benefited from strong stock selection, while sector allocation detracted. Selection was strongest in the Consumer Discretionary, Information Technology, and Health Care sectors
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 full disclosure presentation 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. SGA earnings growth forecasts are based upon portfolio companies’ non-GAAP operating earnings. SGA Emerging Markets Growth Composite inception is 8/1/2014.
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, 1.1%, employing the Emerging Markets 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. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Upon request, free of charge, SGA can provide a list of all portfolio holdings held in SGA’s Emerging Markets portfolio for the past year. Past performance is not indicative of future results