- The portfolio depreciated in value during the quarter but generated strong relative returns as markets experienced significant volatility and weakness due to the global spread of the COVID-19 virus.
- Market volatility rose to historic levels a month after markets hit new highs; the increased volatility created opportunities for us to buy more attractive long-term growth opportunities at better valuations.
- Stock selection and sector weights each contributed positively to portfolio outperformance; selection in the Consumer Discretionary and Health Care sectors contributed most while the portfolio also benefitted from overweights in the Consumer Staples and Health Care sectors, and no exposure to the Energy sector also meaningfully benefited returns.
- A new position was initiated in Infosys and an existing position in Chr. Hansen was sold; other positions were trimmed and added to as we sought to take advantage of wide fluctuations in stock prices.
- With a gradual and staggered economic recovery expected across the world, we strongly believe that the superior business quality of our companies (better pricing power, recurring revenues, more predictable earnings growth, strong cash flow generation, and solid management teams) will be rewarded by wary investors in the years ahead.
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.
SGA earnings growth forecasts are based upon portfolio companies’ non-GAAP operating earnings. 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, 1.0%, employing the International 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. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Upon request, free of charge, SGA can provide a list of all portfolio holdings held in SGA’s International portfolio for the past twelve months. Past performance is not indicative of future results.