- The portfolio generated strong absolute returns in Q4 but trailed the MSCI All Country World ex-USA Index (ACWI ex-USA) as global markets rose sharply due to rising optimism over future global economic growth; higher beta small-cap growth companies with lower returns on equity and no earnings performed best.
- For the year, the portfolio generated a return of 31.0% (gross) and 29.7% (net) while the market returned 21.5% driven partially by significant strength in the Information Technology sector.
- Stock selection and sector allocations detracted from performance in Q4 due primarily to the portfolio’s overweight in the weakly performing Consumer Staples sector and stock selection in the Materials, Health Care, and Information Technology sectors where positions in Chr. Hansen, Alcon, and Temenos detracted most from returns.
- The portfolio’s outperformance for the year was driven by strong stock selection across all sectors except Information Technology where a position in Wirecard detracted earlier in the year; selection was strongest in the Consumer Discretionary sector led by positions in MercadoLibre, New Oriental Education and Alibaba.
- New positions in Adyen, Dassault and Fast Retailing were initiated, while holdings in Danone, Givaudan and M3 were liquidated; positions in TAL Education and Wal-Mart de Mexico were trimmed on strength and the position in Linde was increased.
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.