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- The Polen Global Emerging Markets Growth Composite Portfolio (the “Portfolio”) grew by 3.26% gross of fees during the second quarter, underperforming the MSCI Emerging Markets Index (the “Index”), which increased by 5.05%. Underperformance was primarily driven by allocation effects.
- Communication services and health care were the primary headwinds to relative performance, while the consumer discretionary and staples sectors contributed to returns.
- Cyclical sectors such as energy, materials, and industrials performed well during the quarter. Thus, our significant underweight in these sectors weighed on returns.
- Despite contrasting experiences with COVID across emerging markets, a recent World Bank publication forecasts 2021 GDP growth in the emerging world at 6%, led by China and India.
- We continue to expect our businesses to grow their earnings per share by more than 35% in 2021, accelerating from 7% recorded in 2020.
- Thinking ahead about the potential for inflation risk, we assess that our Portfolio of asset-light, high ROIC companies, should be well-placed to navigate a higher inflationary environment.
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