2Q2021 – Focus Growth Commentary

We much prefer aligning our clients with businesses that we believe have favorable long-term earnings power rather than getting wrapped up in short-term trades.

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  • During the second quarter of 2021, the Polen Focus Growth Composite Portfolio (the “Portfolio”) returned 13.25% gross of fees versus 11.93% for the Russell 1000 Growth Index (the “Index”) and 8.55% for the S&P 500. Year to date, the Portfolio has surged 15.30%, gross of fees, versus 12.99% and 15.25% for the Index and S&P 500, respectively.
  • The “reopening/reflation trade” seems to have already run its course as statements from the Federal Reserve Board (the “Fed”) and the market’s Fed Funds rate expectations may indicate that the U.S. central bank is unlikely to let inflation run too hot.
  • Most of our companies grew during the pandemic despite the challenging economic backdrop and have continued to report revenue and earnings growth above our expectations.
  • While this makes for more difficult comparisons going forward, growth rates in early 2021 for several companies in the Portfolio, including Alphabet, Facebook, and Adobe, have remained resilient.
  • We had limited trading activity in the second quarter outside of a small trim of Gartner. Most of our companies performed at or above the levels expected, and we did not otherwise see better uses of capital in the second quarter.
  • Given recent headlines around possible regulatory changes for big tech companies, we examined the difference between exposure to risks such as antitrust complaints and the actual risks we see based on our assessments of these businesses.

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