- SGA’s International Growth portfolio returned -2.3% (gross) and -2.5% (net) in Q2 2018 compared to -2.6% for its primary benchmark the MSCI All Country World ex-USA Index (ACWI ex-USA), and -1.4% for the ACWI ex-USA Growth Index
- Higher U.S. interest rates and significant repatriation of funds by corporations due to tax law changes pushed the U.S. dollar higher negatively impacting emerging market currencies influenced by the dollar
- Non-U.S. developed markets outperformed emerging markets which are more levered to currency fluctuations and restrictive trade policies; European economic growth showed signs of decelerating and markets particularly in Latin America and Europe faced selling pressure
- Smaller-cap growth companies performed best; higher levels of business quality were rewarded but the reward varied significantly over the course of the quarter
- The Energy sector performed best by a wide margin as global oil prices rose; traditionally defensive sectors including Health Care, Utilities and Consumer Staples performed next best as concerns over global economic growth amid rising interest rates and trade frictions grew; Financials, Telecommunications and Industrials performed the worst
- Positions in JD.com and Raia Drogasil were sold and a new position in Temenos was added
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.