- Our approach faced headwinds as smaller cap, lesser quality, and more economically sensitive companies outperformed on rising expectations for a strong economic recovery
- The portfolio faced strong cyclical headwinds early in the quarter but then outperformed for the balance of the quarter and for the overall period as rising interest rates weighed on higher growth companies; stock selection
was weak early in the quarter but very strong in the second half
- The portfolio’s position in Match Group was sold due to valuation and the proceeds divided among other more attractively valued secular growth holdings
- We continued to actively trim positions that had appreciated substantially in the market rebound such as Facebook, PayPal, Intuitive Surgical, IHS Markit and others; we also purchased additional shares of growth companies such as MSCI, Ball Corp., UnitedHealth, American Express and others that remained attractively valued
- The portfolio is positioned in our highest confidence and most attractively valued long-term secular growth opportunities; the portfolio remained underweight the Information Technology and Consumer Discretionary sectors
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, 0.75%, employing the U.S. Large Cap 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. The performance record presented for periods prior to July 1, 2003 occurred before to the inception of SGA and represents the portable performance record established by two of SGA’s founders (and investment committee members) Gordon Marchand and George Fraise while affiliated with a prior firm. 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. Large Cap Growth portfolio for the past year. SGA’s earnings growth forecast data is based upon portfolio companies’ non-GAAP operating earnings.