Highlights:
- Portfolio returned 8.7% (gross) and 8.5% (net) versus 9.8% for the MSCI All Country World Index (ACWI) and 5.3% for the ACWI Growth Index; underperformance relative to the ACWI was due to portfolio sector exposures
- For the year, the portfolio trailed the ACWI but outperformed the ACWI Growth Index as valuations for long duration growth stocks were negatively impacted by sharply rising interest rates
- Portfolio’s focus on companies with higher business quality continued to face headwinds during the quarter outside of the U.S. as companies with lower returns on equity and no earnings outperformed
- Underweight exposure to the U.S. contributed positively to relative performance; a bounce in Emerging Markets was also beneficial
- A new position was initiated in global insurer Aon, while other positions were trimmed and added to as we took advantage of market movements
- We are pleased to announce that Kishore Rao will replace Gordon Marchand on SGA’s Executive Committee (the group charged with running SGA’s business) effective July 1st, as Gordon retires from SGA
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.