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long-term growth

Growth Fund - Commentary

Growth Fund

4Q16 Commentary1


In the last quarter of 2016, financial markets were overwhelmingly captive to the somewhat surprising election triumph of Donald Trump. On the eve of the election, handicappers assigned very high odds to the notion that Hillary Clinton would win, but would ultimately face gridlock amid near certain control of the House of Representatives by Republicans. Instead, Trump won the presidency and will enter the White House with Republicans in charge of both the House and the Senate. Stocks, bonds, currencies and commodities abruptly repriced around the globe amid this new political reality.

As global financial markets considered the implications of a Trump-led GOP’s agenda seeking to reshape certain policies, stocks surged along with the U.S. dollar and certain commodities linked to potential U.S. infrastructure rebuilding efforts. In contrast, risk-free sovereign bond prices plunged. These movements appeared to anticipate that fiscal stimulus and sharp regulatory relief would lift the U.S. economic trajectory, and the rest of the world would benefit as well.

For the quarter, the S&P 500 Index2 rose by 3.82%, while the Nasdaq Composite Index2 rose 1.66%. The Nikkei 225 Stock Average Index2 surged 16.35%. Emerging economy equity markets, in sharp contrast, contracted by -4.16% (as measured by the MSCI Emerging Markets Index2). Oil prices rebounded by nearly U.S. $6/bbl, and the U.S. dollar advanced by 6% versus the euro and 15% versus the yen during the period. 

In terms of market capitalization, small cap stocks gains were more than double that of large cap stocks, as the Russell 20002 and Russell 10002 indexes posted quarterly returns of 8.83% and 3.83%, respectively. As for investment style, dispersion was just as significant as the Russell 1000 Growth Index2 and the Russell 1000 Value Index2 posted quarterly returns of 1.01% and 6.68%, respectively.

The Marsico Growth Fund posted a return of -4.23% for the fourth quarter, underperforming its benchmark, the S&P 500 Index, which returned +3.82%.

Primary Contributors4: Stock selection in the Health Care sector3 was the largest driver of performance during the period. The Fund’s underweight allocation to the Consumer Staples sector, one of the weaker-performing sectors of the benchmark index, also aided performance. The Fund benefitted from a lack of investment in the Utilities sector as well.

Primary Detractors4: Stock selection in the Information Technology sector was the largest detractor from performance, as several of the Fund’s Software & Services positions declined during the period. Similarly, stock selection in the Consumer Discretionary and Industrials sectors was also a detractor from performance. From an allocation perspective, an underweight exposure to a strong-performing sector of the benchmark index, Financials, held the Fund back.


For more information, please click here for the Marsico Growth Fund Quarterly Investment Update.

1 Performance data quoted represents past performance. Past performance is no guarantee of future results. A Fund's performance, especially for short time periods, should not be the sole factor in making an investment decision. Please keep in mind that our views on investments discussed herein are subject to change at any time and the holdings represented here do not represent all of the securities purchased, sold, or recommended by Marsico Capital Management, LLC ("MCM"). Certain less-material factors may not be presented.

2 The S&P 500 Index is a registered trademark of S&P and is an unmanaged broadly-based index of the common stock prices of 500 large U.S. companies, and includes the reinvestment of dividends. The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership, and includes the reinvestment of dividends. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership, and includes the reinvestment of dividends. The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values, and includes the reinvestment of dividends. The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values, and includes the reinvestment of dividends. The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. The MSCI Emerging Markets Index captures large and mid cap representation across 23 Emerging Markets (EM) countries*. With 833 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The Nikkei-225 Stock Average Index is a price-weighted equity index, which consists of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange, excluding ETFs, REITs, preferred equity contribution securities, and tracking stocks (on subsidiary dividend) etc. other than common stocks. Sources of foreign exchange rates may be different between the Fund and the benchmarks. The indexes described above are unmanaged and not available for direct investment. For comparison purposes, it should be noted that the indexes do not charge fees and have no expenses.

3 Sector and industry weightings are determined using the Global Industry Classification Standard (“GICS”). GICS was developed by and is the exclusive property and service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s (“S&P”), and is licensed for use by MCM. Neither MSCI, S&P, MCM, nor any third party involved in compiling GICS makes any express or implied warranties or representations with respect to such standard or classification (or the results from use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any such standard or classification. MSCI, S&P, and MCM, and any of their affiliates or third parties involved in compiling GICS shall not have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

4Source: UMB Fund Services, Inc., FactSet and Marsico Capital Management, LLC (“MCM”). Data shown such as portfolio holdings, percentages, country, and sector weightings generally applied on the date shown above, and may have changed substantially since then. References to specific securities and sectors are not recommendations to buy or sell such securities or related investments.