- SGA’s Global Growth portfolio returned 3.2% (gross) and 3.0% (net) in Q3 2017 compared to 5.2% for its primary benchmark the MSCI All Country World Index (ACWI); year-to-date, the portfolio has returned 23.1% (gross) and 22.3% (net) compared to 17.3% for the MSCI ACWI
- Emerging markets outperformed developed markets again with Latin America performing best
- Higher beta smaller-cap growth stocks outperformed; the reward to quality metrics was mixed with low return on equity companies and those with no earnings outperforming, but also those with low debt being rewarded
- Energy (+9.4%), Materials (+9.1%), and Technology (+8.9%) performed best; Consumer Staples (-0.2%) and Health Care (+2.4%) were weakest
- Relative performance was negatively impacted by the outperformance of stocks not owned (and in many cases not on our Qualified Company List), decisions to trim strongly performing positions which had become less attractive from a valuation standpoint, and our reallocation of capital to other holdings which presented more attractively valued growth opportunities over our 3-5 year investment outlook
- Stock selection in the Consumer Discretionary sector detracted most from performance; selection in Consumer Staples and Energy detracted to a lesser degree; sector allocations had only a minor impact
- Holdings in Ping An Insurance, Kansas City Southern and Whole Foods Market were sold on strength to fund new positions in TJX Companies and Ulta Beauty. Positions in Amazon and Tencent were reduced on strength while positions in Fast Retailing, Infosys, MercadoLibre, and MYOB were added to on weakness
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.