- During the fourth quarter of 2020, the Polen International Growth Composite Portfolio (the “Portfolio”) returned 4.79% gross of fees. The MSCI All Country World Index (ex-US) (the “Index”) returned 17.02%. For the full year of 2020, the Portfolio returned 12.75% versus 10.65% for the Index. For the full year of 2020, the Portfolio outperformed the Index by a 2.10% margin.
- After outperforming in the first quarter, tracking in the second, and outpacing in the third quarter, the Portfolio’s fourth quarter relative performance shortfall stemmed from stock-specific headwinds and strong Index performance driven by industry groups we do not hold.
- During the fourth quarter, Index constituents with top quartile quality factors, like return on equity, return on invested capital, and gross profit margin—qualities we seek in our investments—all experienced negative double-digit relative performance.
- Beginning in November, investor favor seemed to shift toward cyclical industries like banks, semiconductors, technology hardware, autos, energy, materials, and industrials. The timing of this shift followed the announcement that a viable coronavirus vaccine was slated for fast-tracked approval and rollout.
- During the quarter, we exited our investment in RELX and initiated a new position in Temenos. We added to our investments in Alibaba Group and Sage Group, and we trimmed our positions in Accenture and Dassault Systemes.
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