Highlights:
- SGA’s Global Growth portfolio returned 3.9% (gross) and 3.6% (net) in Q3 2018 compared to 4.3% for its primary benchmark the MSCI All Country World Index (ACWI), and 4.6% for the ACWI Growth Index
- U.S. stocks outperformed non-U.S. Developed and Emerging Market stocks by a wide margin as investors rewarded the certainty and strength being exhibited by the U.S. economy; concerns over escalating trade tensions were offset by positive economic data and high levels of consumer and business confidence in the U.S.
- U.S. GDP growth in Q2 posted its strongest gain since 2014 as benefits from recent tax cuts, regulatory reform and repatriation of funds from overseas kicked in
- Larger-cap U.S. companies performed best; the return to business quality was mixed with high return on equity companies outperforming, but also those with high debt; the return differential between growth and value, and companies with and without earnings was minimal
- Health Care outperformed by a wide margin, followed by Technology and Industrials; other sectors performed roughly in line or trailed the ACWI benchmark
- New positions were initiated in Alibaba and Nestle while our position in Ulta Beauty was sold on strength; guided by our valuation discipline, we continued to trim positions where valuations were less attractive and add to positions where we saw more opportunity
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.