- Portfolio marginally outperformed the Russell 1000 Growth Index in Q2; business quality characteristics began to be rewarded later in the quarter after having underperformed over the last year
- Companies with the highest forecasted growth underperformed by the widest margin posing a headwind for our approach
- Positions in IQVIA and UnitedHealth contributed most to portfolio performance, while positions in Amazon, Workday, and Illumina detracted most
- RingCentral, PayPal, and Illumina were sold due to competitive concerns as more attractive higher confidence growth opportunities emerged given increased market volatility; positions in Adobe and IQVIA were established
- Portfolio is more attractively valued than the market with better business quality and forecast growth; well positioned for an environment of continued high volatility and slowing economic growth
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.