3Q2022 – Global Growth Commentary

Our companies’ fortress balance sheets remove concerns over increased rates leading to increases in debt-related expenses

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  • During the third quarter of 2022, the world continued to experience persistent inflation; zero tolerance COVID-19 policies in China, resulting in the sudden and complete shutdowns of large cities; the ongoing war in Ukraine; and substantial tightening measures by central banks worldwide.
  • The Global Growth Composite Portfolio (the “Portfolio”) trailed the MSCI ACWI Index (the “Index”) as overweight allocations to the communication services and information technology sectors, zero weightings to the energy, industrials sectors, and an underweight to the financials sectors were negative. The overweight to the consumer discretionary sector was a positive.
  • At an individual company level, the top three absolute contributors were Amazon, ADP, and Autodesk. The three largest absolute detractors were Adobe, ICON, and Adidas.
  • We added L’Oréal to the Portfolio during the quarter, taking an initial 1% position at the end of July and then adding another 1% following its compelling earnings report.
  • Prices can and certainly do wild things in the short run, but we believe that over the long term, our companies will trade for fair valuations. When combined with the earnings growth we expect, the Portfolio is poised to generate attractive client returns over the next three to five years.

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