- Portfolio trailed the MSCI EM and EM Growth Indices in Q2 but remains ahead over the year-to-date period
- Chinese stocks recovered as Covid lockdowns eased and the Chinese government signaled more stimulus to re-accelerate growth; Latin American stocks underperformed significantly given political uncertainty and concerns about slowing global growth
- Quality factors unrewarded as lower quality companies continued to outperform; expect higher quality growth companies to be increasingly rewarded moving forward as global economy slows
- A new position in Adidas was initiated, replacing the portfolio’s position in Abbott
- Portfolio forecast to grow earnings 19% per year over the next three years, higher than the MSCI EM Index with higher quality characteristics and greater predictability
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 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. 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 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. 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. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request. SGA earnings growth forecasts are based upon portfolio companies’ non GAAP operating earnings. SGA Emerging Markets Growth Composite inception is 8/1/2014. Past performance is not indicative of future results.