Highlights:
- SGA’s International Portfolio returned -9.9% (gross) and -10.1% (net) in Q4 2016 compared to -1.3% for the MSCI ACWI ex-USA Index and -5.7% for the MSCI ACWI ex-USA Growth Index.
- Higher interest rates and a rising U.S. Dollar after the November U.S. election led to a shift from emerging markets leadership to developed markets, with U.S. markets performing best.
- Economically-sensitive market segments outperformed; value outperformed growth by wide margin; Energy, Financials and Materials stocks outperformed, while Staples, Health Care and Utilities stocks performed worst.
- SGA International Growth companies are forecasted to generate double-digit earnings and revenue growth over the next three years, far exceeding the expectations for the MSCI ACWI ex-USA Index.
- Turnover was below-average for the quarter with a position in Raia Drogasil being added and a position in Ambev being liquidated and then repurchased.
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.