Highlights:
- Portfolio underperformed the MSCI All Country World Index (ACWI) in Q2 but outperformed the ACWI Growth Index; reward to business quality characteristics were mixed but improved from Q1
- Companies with the highest forecast growth underperformed by the widest margin posing a headwind for our approach
- Positions in AIA Group and S&P Global contributed most to portfolio performance, and Novo Nordisk detracted the least, while positions in Amazon, Workday, and MercadoLibre detracted most
- New positions in Adobe and S&P Global were established; positions in PayPal and Illumina were sold due to increasing competitive concerns and forced attrition as more predictable and higher confidence growth opportunities emerged given increased market volatility
- Portfolio’s superior business quality and forecast growth positions it well for an environment with high volatility and slowing global economic growth
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 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 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. 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. 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 investments, calculating performance, and preparing GIPS Reports are available upon request. SGA’s earnings growth forecast data is based upon portfolio companies’ Non-GAAP operating earning.