1Q2023 – U.S. Small Company Growth Commentary

In unprecedented market environment, our focus remains on high-quality growth companies

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  • In the first quarter, Polen U.S. Small Company Growth Composite Portfolio (the “Portfolio”) returned 11.14% gross and 10.81% net of fees, respectively, compared to the 6.07% return of the Russell 2000 Growth Index (the “Index”).
  • The start to 2023 has proven no less volatile than the unprecedented, macro-driven environment we experienced in 2022. Markets initially embraced the growing possibility of a soft landing before stronger-than-expected economic data prompted concerns the Fed would continue to raise rates. Then, the collapse of Silicon Valley Bank and ensuing concerns over potential contagion introduced a new reality for the markets to contend with.
  • The top contributors to the Portfolio’s relative performance in the first quarter included Goosehead Insurance, Duck Creek Technologies and Altair Engineering. These were also the top contributors on an absolute basis. By contrast, the most significant detractors from the Portfolio’s relative performance included Azenta, Warby Parker, and Bumble. On an absolute basis, the largest detractors were Azenta, Warby Parker, and AMN Healthcare.
  • We initiated two new positions in high quality businesses, funded by three eliminated positions and some trims to existing holdings.
  • While we can’t predict when markets will recover, we believe that maintaining our focus on high-quality growth companies that are well positioned to drive cash flow and earnings growth over the next five years will generate attractive long-term performance.

Read the full commentary & disclosures here →