- The portfolio generated strong absolute returns while trailing the Russell 1000 Growth Index as lesser quality and more economically sensitive companies led the rebound
- Stock selection and residual sector allocations detracted from results
- Stock selection in the Health Care and Information Technology sectors detracted most from relative performance; the portfolio’s overweight in Real Estate (Equinix) which was the weakest performing sector in the benchmark hurt results while having an underweight exposure to Health Care benefited results
- New positions in aluminum container producer Ball Corp. and human capital management company Workday were initiated while positions in Becton Dickinson and Ecolab were liquidated
- The portfolio is well positioned to generate revenue and earnings growth meaningfully higher than that of the Russell 1000 Growth Index benchmark over the coming three years with greater predictability and sustainability
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.
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 U.S. Focused 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. 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 U.S. Focused portfolio for the past year. SGA’s earnings growth forecast data is based upon portfolio companies’ non-GAAP operating earnings.