- Portfolio trailed the MSCI EM Index in Q4 and for the year; the portfolio trailed the EM Growth Index in Q4 but outperformed for the year.
- Markets rose on rising optimism around the global economic backdrop and rising hopes for central bank pivots in 2024 as inflation pressures are moderating. Chinese stocks remained weak given continuing concerns around its property market, economy, policy actions, and relations with the West.
- Positions in MercadoLibre, FEMSA, and HDFC Bank contributed most positively to performance, driven by strong quarterly results. Positions in Yum China, Mengniu Dairy, and H World Group detracted most driven largely by weakness in Chinese stocks.
- No new positions were initiated or liquidated. Positions in AIA Group, Heineken, Unilever, and Yum China were added to on weakness, while positions in CP All, MercadoLibre and Wal-Mart de Mexico were trimmed.
- Portfolio is forecasted to grow earnings 15% 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 less reliable.
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.