- The portfolio returned 8.2% (Gross) in Q2 and 8.0% (Net) versus 12.8% for the Russell 1000 Growth Index and 8.7% for the S&P 500 Index
- Strong performance by the largest seven companies in the index accounted for more than half of the portfolio’s relative underperformance
- Higher growth expectations in Technology and related stocks led to higher valuations despite a small increase in bond yields
- We initiated a position in NVIDIA as our earnings estimates rose meaningfully with higher conviction in the likely benefit to the company from the adoption of AI
- Positions in Amazon, Workday, Netflix, ServiceNow, Intuitive, Alphabet, and Adobe were trimmed on strength while positions in Aon, Visa, Thermo Fisher, and Dollar General were added to on weakness
- Portfolio revenues and earnings are expected to grow by 10.8% and 17.5%, respectively, over the next three years versus 5.8% and 12.6% for the Russell 1000 Growth Index as we continue to expect gradual slowing in macroeconomic and profit 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. SGA U.S. Large Cap Growth Composite inception revised to 7/1/2003 from 4/1/2000 due to SEC New Marketing Rule change relating to use of predecessor performance record. 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.