Highlights:
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SGA’s Emerging Markets portfolio returned 8.7% (gross) and 8.4% (net) in Q4 2017 compared to 7.4% for its primary benchmark the MSCI Emerging Markets Index; during the same period the MSCI Emerging Markets Growth Index returned 7.9% and the MSCI ACWI with EM Exposure Index returned 6.9%
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Emerging markets outperformed developed markets; Asia was the best performing region
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Small cap growth performed best; the reward to business quality was mixed as companies with higher returns on equity and earnings outperformed as did firms with higher levels of debt and higher betas
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Health Care sector performed best followed by the Discretionary and Materials sectors; Utilities and Telecommunications performed worst
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Strong stock selection was responsible for the portfolio’s outperformance; selection in the Financials sector contributed most to SGA’s relative performance followed by selection in the Consumer Discretionary and Technology sectors. Stock selection in Health Care detracted most from relative returns
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A new position in Heineken was added to the portfolio while positions in Ping An Insurance and Magnit were liquidated; positions in AIA Group and Shoprite among others were increased on weakness while positions in Baidu and Ctrip were trimmed
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.