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- Several exogenous factors converged in the first quarter of 2022, including persistent inflation, tightening monetary policy, ongoing supply chain issues, COVID-19-accelerated dynamics, and heightened geopolitical risk, all of which affected the performance of the market and the Global Growth Composite Portfolio (the “Portfolio”).
- While we don’t expect any of these factors to have a meaningful long-term impact on the businesses that we own, the swift change in interest rate expectations has led to a decline in growth stock valuations, with prior multiple expansion and concerns around COVID-19 pull-forward dynamics likely contributing as well.
- With respect to individual companies, Aon, Visa, and Mastercard were the top absolute performers during the quarter, and the three leading absolute detractors during the quarter were ICON, Align Technology, and Adobe.
- We took advantage of several short-term share price declines, which included initiating a new position in Netflix and adding to our positions in SAP, Amazon, Align Technologies, and Adobe.
- Short-term share price movements may not always reflect fundamentals, but when markets eventually become more discerning, robust fundamentals tend to provide ballast. Looking longer-term, we remain confident in the Portfolio’s ability to continue to deliver mid-teens EPS growth during the coming years.
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