- The rebound in deep cyclical stocks moderated in Q2 with large cap growth outperforming value and the reward to business quality metrics varying over the quarter.
- The portfolio trailed its Russell 1000 Growth Index benchmark in Q2 with stock selection and sector weights detracting from relative returns.
- Stock selection detracted in the Information Technology, Communication Services, and Materials sectors but was partially mitigated by strong selection in the Financials, Consumer Discretionary, and Health Care sectors.
- The portfolio’s lack of exposure to Consumer Staples and underweight in the Consumer Discretionary sector benefited results while an overweight in Materials and underweight in Information Technology detracted.
- A new position was initiated in RingCentral. Positions in Linde, Microsoft, Nike, Union Pacific, and others were trimmed on strength while we purchased additional shares in positions including Workday, Intuit, Disney, Illumina, and Regeneron.
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, 0.75%, 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 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. Large Cap Growth portfolio for the past year. SGA’s earnings growth forecast data is based upon portfolio companies’ non-GAAP operating earnings.