- Portfolio trailed the MSCI EM and EM Growth Indices in Q3
- Initial optimism for a turnaround in China faded as economic data remained weak and stimulus measures underwhelmed; China and markets leveraged to the Chinese economy weighed on the index, while strength in India contributed positively to market performance
- Short-term disappointments and uncertainty weighed on positions in HDFC Bank, Shandong Weigao, and Bud APAC which detracted most from performance. Positions in Sanlam, Infosys, and MercadoLibre contributed most positively to performance
- A new position in Bajaj Finance was initiated during the quarter; no positions were liquidated. We trimmed positions in XP, Bank of Central Asia, Unilever, and L’Oreal on strength while adding to positions in Tencent and Mengniu Dairy on weakness
- Portfolio is forecasted to grow earnings 16% per year over the next three years, in line with its long-term average, while the 16% expected growth for the EM Index is well-above average and more susceptible to a slowing global economic backdrop
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.