- The portfolio generated strong absolute returns in Q4 but trailed the MSCI All Country World Index (ACWI) as global markets rose sharply due to rising optimism over future global economic growth; smaller-cap growth companies with higher betas, lower returns on equity and no earnings performed best.
- For the year, the portfolio generated a return of 33.4% (gross) and 32.3% (net) while the MSCI ACWI returned 26.6% driven particularly by strength in the Information Technology sector.
- Stock selection was the primary detractor from performance in Q4 due primarily to selection in the Information Technology and Consumer Staples sectors where positions in Infosys, Danone and Heineken detracted most.
- For the year, the portfolio’s outperformance was driven heavily by stock selection in the Consumer Discretionary and Real Estate sectors where positions in New Oriental Education, MercadoLibre, Alibaba and Equinix posted strong returns.
- While sector allocations are a bi-product of stock selection in our approach, they contributed positively to performance in both periods; market leadership was quite narrow with Information Technology being the strongest performer for the quarter and year.
- A new position in Thai convenience and wholesale store operator CP All was initiated; positions in Autodesk, Alphabet, HDFC Bank, and New Oriental Education were trimmed on strength while additional shares in Amazon, Salesforce.com, YUM! Brands and others were purchased 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.