- Portfolio outperformed its Russell 1000 Growth Index benchmark in Q4 but trailed it for the year
- Market’s reward of higher margin companies with greater sales stability benefited relative performance; however, longer duration growth continued to face headwinds as the market preferred nearer term earnings and higher dividend yields
- Weak returns from Tesla, a big index outperformer over the past three years, benefited the portfolio’s relative performance; underperformance by Apple, which has an 11% weight in the benchmark, also contributed positively
- No positions were initiated or fully liquidated during the quarter as we remained confident in the growth prospects and valuations of our existing holdings
- Despite some near-term economic momentum in the U.S., we continue to expect slowing economic and corporate profit growth over the course of 2023 with a rising chance of recession as businesses begin to feel the impact of higher interest rates
- We are pleased to announce that Kishore Rao will replace Gordon Marchand on SGA’s Executive Committee (the group charged with running SGA’s business) effective July 1st, as Gordon retires from SGA
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 GIPS Report 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 investments, calculating performance, and preparing GIPS Reports 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.