- The portfolio generated strong absolute returns and outperformed the Russell 1000 Growth Index as markets rebounded in response to hopes for a faster than expected economic recovery and continued massive monetary and fiscal accommodation
- The market advance was driven by a narrow group of e‑commerce and technology stocks more highly leveraged to the quicker pace of business re-openings; we took advantage of volatility to lock in gains where valuations had risen and trade up in terms of growth and cash flow visibility
- Stock selection was the driver of portfolio outperformance with the selection strongest in the Information Technology and Communication Services sectors; selection in the Consumer Discretionary sector was the primary detractor; sector weights detracted moderately from relative returns
- New positions in Ball Corp and Union Pacific were initiated while holdings in Ulta, Booking Holdings and TJX Companies were sold
- Given the superior business quality and predictability of our companies, the portfolio is expected to generate significantly greater revenues and earnings growth than the Russell 1000 Growth Index benchmark over the coming three years despite significant uncertainties over economic growth, as well as tax and regulatory policies
- We are pleased to announce that HK Gupta will join our Global Growth equity portfolio management team effective January 1st, 2021 given the strong contributions he has made in research and portfolio management since joining SGA in 2014 and co-managing our Emerging Market and Global Mid-Cap portfolios; we are also pleased to announce that Peter Knudsen was promoted to Client Portfolio Manager effective July 1st
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.