2Q 2026 Global Growth Commentary

The MSCI ACWI advanced 14.93% in the second quarter of 2026, its strongest quarterly return since the initial stages of the COVID recovery in mid-2020. The Polen Global Growth Composite Portfolio rose 8.44% (net of fees) over the same period. The gap, like in the U.S., was driven by a rally narrowly concentrated in perceived AI infrastructure beneficiaries — semiconductors and memory-related businesses in particular — while many software, healthcare, and financial services companies lagged despite intact competitive positions.

The team responded with significant portfolio activity, initiating six new positions that span commercial aerospace, power infrastructure, European defense, luxury consumer goods, and industrial automation, while exiting three healthcare-related holdings where near-term momentum had weakened.

What Drove Global Equity Returns in Q2 2026?

The MSCI ACWI's best quarter in six years was defined by the same dynamic observed in U.S. markets: investors rewarded businesses with direct exposure to near-term AI infrastructure spending while showing limited patience for companies with longer-duration growth profiles. Semiconductor-related businesses have become an increasingly important component of the global index and one of the largest determinants of relative performance for growth managers. In the team's view, the MSCI ACWI increasingly reflects the market's conviction that the AI infrastructure buildout will remain the dominant source of growth and value creation.

Which Holdings Had the Largest Impact on Returns?

Tokyo Electron was the portfolio's strongest contributor as a leading supplier of semiconductor manufacturing equipment benefiting from robust investment in leading-edge logic and high-bandwidth memory. TSMC and ASML also contributed positively. On the detractor side, Zoetis declined on competitive pressure in animal health dermatology, while the portfolio's lack of exposure to Micron Technology — which rallied sharply on memory demand expectations — weighed on relative performance.

How Is the Portfolio Being Repositioned Globally?

The team's new positions reflect a deliberately broadened opportunity set. GE Aerospace and Howmet Aerospace capture long-cycle demand from commercial aviation fleet aging and aftermarket service needs. GE Vernova addresses the structural gap between rising electricity demand and available power generation capacity. Hermès adds exposure to one of the world's most durable luxury franchises. Keyence positions the portfolio in industrial automation recovery across semiconductors and machine tools. Rheinmetall provides exposure to the structural increase in European defense spending.

The three sales — Boston Scientific, Siemens Healthineers, and Zoetis — each involved businesses the team continues to respect but where near-term growth had become less compelling relative to the new opportunities.

What Is the Team's Forward View?

The team is applying the same fundamental research discipline with greater emphasis on business momentum and timing. It is finding opportunities in both familiar areas — semiconductor equipment and foundries — and in less conventional places for a growth portfolio, including aerospace aftermarket cycles, power infrastructure bottlenecks, and European defense procurement. The common thread is concentrated industry structures, supply constraints, and multi-year demand visibility.

Past performance does not guarantee future results. The commentary is not intended as a guarantee of profitable outcomes. Please see Important Disclosures in the full commentary.