- SGA’s U.S. Large Cap Growth portfolio returned 6.6% (gross) and 6.4% (net) in Q2 2017 compared to 4.7% for its primary benchmark the Russell 1000 Growth Index, and 3.1% for the broad market S&P 500 Index.
- Equities generated high absolute returns despite mixed signals for U.S. economic growth, political division in Washington, weakness in the price of oil and energy related businesses, less monetary accommodation by the U.S. Federal Reserve and many geopolitical concerns.
- Large-cap growth stocks with higher quality business characteristics outperformed domestically; Emerging markets outperformed non-U.S. developed and U.S. markets.
- Energy stocks declined significantly on renewed concerns over higher U.S. shale oil production and the potential for continued oversupply; the portfolio’s overweight to the sector detracted about 0.7% from relative returns.
- Strong stock selection in the Health Care and Consumer Staples sectors were the largest contributors to the portfolio’s outperformance; Whole Foods, Regeneron and Novo Nordisk were the largest contributors; positions in Schlumberger, Core Labs and Lowe’s detracted most.
- Positions in Apple and Colgate-Palmolive were sold and positions in Autodesk and J.B. Hunt were added; our position in Whole Foods was significantly reduced following Amazon’s acquisition offer; we added to positions in Chipotle Mexican Grill, Schlumberger and UnitedHealth among others on weakness and trimmed positions in Amazon, Kansas City Southern and Red Hat among others on strength.
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. 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.