2Q2020 – Focus Growth Commentary

We believe aligning with the most competitively advantaged businesses for the long term, through crises, is the best way to not only generate positive returns but also to preserve capital during tough times.

  • During the second quarter of 2020, the Polen Focus Growth Composite Portfolio (the “Portfolio”) returned 27.60% gross of fees versus 27.83% for the Russell 1000 Growth Index and 20.54% for the S&P 500 Index. Year to date, the Portfolio has returned 10.98% versus 9.81% for the Russell 1000 Growth Index and -3.08% for the S&P 500 Index.
  • The sharp downturn in the first quarter of 2020, catalyzed by the spread of COVID-19 globally and quarantining to stop its spread, gave way to an equally impressive rally in the second quarter of 2020. Almost every holding in the Portfolio appreciated at least 10% in the second quarter.
  • Our top performers in the second quarter were Microsoft, Facebook, and PayPal. There were no detractors during the quarter, but the smallest contributors were ADP, Starbucks, and MSCI.
  • Unlike the first quarter, we had very little trading activity in the second quarter. We added to our positions in Autodesk and Starbucks and trimmed Nike. There were no new additions to the Portfolio.
  • We have always resisted the temptation to be tactical. We invest only in businesses that we believe to be of the highest quality with strong balance sheets.
  • In our experience, these types of companies typically can grow and invest through the most difficult times, even if their stock prices decline temporarily, and further distance themselves from competitors during these periods.

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