3Q2021 Polen Capital Global Growth Commentary
In this video Head of the Large Company Growth Team and Portfolio Manager Damon Ficklin discusses the reasons behind the decline in the MSCI ACWI during the September quarter. The most notable themes include higher inflation and the expectation for higher interest rates in the coming years. The market is digesting the expected change in monetary policy around the world and other key factors which include slowing growth, policy changes in China and the COVID-19 pandemic.
Policy actions in China weighed on the share price of Tencent and Alibaba causing the portfolio to trail the benchmark, although a decision was made to exit these positions in July after realising strong returns from both since the inception of the Global Growth Strategy.
Accenture was one of the leading contributors of performance in the Polen Capital Global Growth Fund during the quarter and is a great example of how the pandemic has accelerated the growth of some businesses. For the 2020 fiscal year the company reported 20 per cent growth in new business bookings due to the sustained growth in demand for companies looking to transform.
ICON PLC was a new position to the portfolio during the quarter, a leading global clinical research organisation. ICON has been growing faster than its peers and Polen Capital think it will be even more advantaged given the way clinical trials are evolving and believe the businesses is positioned to deliver mid to high teens earnings per share growth during the next three to five years.
Although an increase in interest rates in coming years would likely weigh broadly on equity valuations, Polen Capital believe favourable earnings growth positions in the Polen Capital Global Growth portfolio will overcome any challenges. At the current valuation of the portfolio, aggregate prices could fall by 30 per cent and the portfolio would still deliver a double-digit investment return over the next five years provided the mid-teens estimated earnings per share growth materialises.
The Polen Capital Global Growth Fund owns shares in Accenture and ICON PLC. This video was prepared 21 October 2021 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade these companies you should seek financial advice.
Established in 1979, Polen Capital is a high conviction growth investment manager with offices in the US and UK. Polen has been dedicated to serving investors by providing concentrated portfolios of the highest-quality companies for more than three decades. The firm’s established team manages US$71 billion in total assets and their longest-running flagship investment strategy has delivered on average double digit annual returns for more than 30 years.
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