- SGA’s Global Growth portfolio returned 8.8% (gross) and 8.5% (net) in Q2 2017 compared to 4.3% for its primary benchmark the MSCI All-Country World Index (ACWI), and 5.7% for the MSCI ACWI Growth Index.
- Equities generated high absolute returns despite disappointing U.S. economic growth, weakness in the price of oil and related businesses, deceleration in China, continued recession in Russia, less monetary accommodation by the U.S. Federal Reserve and many geopolitical concerns.
- Large-cap growth stocks with higher quality business characteristics outperformed; European and Asian stocks outperformed U.S. markets while the MSCI Emerging Markets outperformed the MSCI ACWI ex-U.S.
- Energy stocks declined significantly on concerns over higher U.S. shale oil production, higher than expected output from Libya, Nigeria and Iraq and the potential for continued oversupply.
- Strong stock selection particularly in the Consumer Staples, Health Care and Financials sectors contributed most to the portfolio’s outperformance while selection in the Energy and Consumer Discretionary sectors detracted; an overweight to the strongly performing Technology sector also contributed positively.
- Holdings in Apple and Colgate-Palmolive were sold to fund positions in Autodesk, Ping An Insurance and Sanlam; we added to positions in MYOB, Nike and Schlumberger on weakness and trimmed positions in Kansas City Southern, MercadoLibre, Tencent and Whole Foods on strength.
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.
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, 0.90%, employing the Global 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 Global Growth portfolio for the year. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. SGA’s earnings growth forecast data is based upon portfolio companies’ Non-GAAP operating earnings.