- During the second quarter of 2018, the Polen Global Growth Composite Portfolio (the “Portfolio”) returned +7.24% gross of fees versus +0.53% for the MSCI All Country World Index (the “Index”), outperforming the benchmark by 671 basis points during the quarter. Year to date, the Portfolio has returned 10.73% gross of fees versus -0.44% for the Index.
- Since inception on January 1, 2015, the Portfolio has delivered an annualized investment return of 15.11% compared to 7.78% annualized return from the Index. Thus, the Portfolio has on average outperformed the Index by 733 basis points per year since inception.
- Volatility declined during the quarter, but started climbing again in June, likely reflecting renewed concerns over a potential trade war. Rising U.S. interest rates and the recent strengthening of the U.S. dollar also seem to be introducing challenges for emerging markets, which were the weakest performers during the quarter. Despite these concerns, the strong fundamentals of the businesses within the Portfolio drove strong stock performance.
- From a geographic perspective, our significant outperformance within North America was the biggest contributor to our strong absolute and relative returns during the quarter, but strong stock selection in Europe and Asia also contributed meaningfully. From a sector perspective, our greater exposure to information technology and healthcare, as well as our
outperformance within both of these sectors, contributed the most to our positive returns during the quarter.
- We achieved strong outperformance during the quarter despite one of our largest holdings, Tencent Holdings Ltd., being among our leading detractors and having no exposure to energy, which was the best performing sector during the quarter. We believe this illustrates the strength of our aggregate Portfolio and supports our comfort with investing in only our best ideas even if that means having no exposure to certain sectors.
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