4Q2020 – Focus Growth Commentary

We let our business-focused research guide our investment decisions, armed with our belief that business performance drives share prices over the long-term.

  • During the fourth quarter of 2020, the Polen Focus Growth Composite Portfolio (the “Portfolio”) returned 10.15% gross of fees versus 11.39% for the Russell 1000 Growth Index (the “Index”) and 12.15% for the S&P 500.  For the full year 2020, the Portfolio returned 34.65% gross of fees versus 38.49% for the Index and 18.40% for the S&P 500.
  • The prospect of COVID-19 vaccine approvals and distribution led to a rise in Treasury rates during the quarter and a rotation toward pro-cyclical equities. The energy, financials, industrials, and materials sectors delivered the highest returns in the Index for the quarter.  We have almost zero exposure to these sectors as generally very few companies within them pass our investment guardrails.
  • Over the past year, we calculate that our Portfolio’s earnings per share has grown over 10%, which we view as quite resilient considering the weakness of the U.S. and global economies. The Russell 1000 Growth Index has seen earnings decline 8%, and the S&P 500 Index has seen earnings decline over 17%. In 2021, we expect our earnings per share growth to be above our historical mid-teens rate.
  • We continued to observe ebullient behavior in the U.S. equity market, with some company stock prices increasing on non-economic news and nearly 250 special purpose acquisition company (SPAC) IPOs in 2020. We also calculate that just Apple, Amazon, and Tesla together accounted for nearly 40% of the Russell 1000 Growth’s return in 2020.

Read the full commentary here →