Section Hero Funds

Growth Fund

Growth Fund

1Q21 Commentary1

As we navigated the first quarter of 2021, certain factors were significant drivers of strong market performance during the period. First, on the health care front, with approximately 30% of the U.S. population over 18 vaccinated at the end of March and daily vaccinations climbing, hopes for a brighter future over the course of 2021 emerged. This increase in vaccinations led to expectations that the economy would continue to re-open through the summer and into the fall, and in fact the United States reported that 916,000 new jobs already were created during the month of March.

Across markets, this effect was evidenced by yields on the 10-year U.S. Treasury Note increasing 83 basis points and sectors that were flirting with bankruptcy in 2020 demonstrating strong market returns. Additionally, concerns about inflation emerged as global supply chains and certain commodity prices, such as lumber, reacted to strong increases in demand from sectors like housing. We, like the Federal Reserve, share the view that inflation pressures will likely prove transient as factories and supply chains are re-started around the world.

Additionally, we believe it is important to remember that the world economy will experience an uneven trajectory in its improvement given a multi-year vaccination timetable. For example, the International Air Transport Association (IATA) recently reduced its estimated 2021 total airline-miles-traveled growth rate from 50% year-over-year to only 26%. We believe the re-setting of expectations like this will emerge across various sectors. Longer-term factors prevalent before the emergence of the pandemic such as aging demographics, global debt, and productivity improvements will re-emerge as moderating forces on inflation expectations. In fact, recent comments from Federal Reserve Chair Powell highlighted the difficulty the U.S. economy had in achieving a 2% target inflation rate despite historically low unemployment levels prior to the pandemic. These forces are not likely to abate in the near future.

In terms of market capitalization, small cap stocks started the year off strong as the Russell 20002,3 index posted a +12.70% return for the first quarter of 2021, while large cap stocks lagged with the Russell 10002,3 index return of +5.91%. An even larger gap of outperformance was present among investment styles, where value stocks were clearly in favor. The Russell 1000 Value2,3 and the Russell 1000 Growth2,3 indexes posted quarterly returns of +11.25% and +0.94%, respectively.

The Marsico Growth Fund posted a return of +0.79% for the first quarter, underperforming its benchmark, the S&P 500 Index2, which returned +6.17%.

Primary Detractors5: Stock selection in the Information Technology sector4 had the largest adverse impact on performance for the quarter, where a majority of the Fund's holdings in this area of investment produced negative returns. An overweight allocation to this weaker-performing sector further hindered results. Outcomes from the Financials sector detracted from results, particularly in the Banks industry group as a lack of investment in this stronger-performing area created an additional headwind. A lack of exposure to the strongest-performing area of the benchmark index, Energy, also detracted from performance.

Primary Contributors5: Stock selection and an underweight allocation to the weakest-performing sector of the benchmark index, Consumer Staples, had the largest positive impact on performance during the quarter. The Fund's lack of investment in the weaker-performing Utilities sector contributed a touch to performance as well. 

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 indexes mentioned 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.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2018. FTSE Russell is a trading name of certain of the LSE Group companies. Russell® is a trade mark of the relevant LSE Group companies and is/are used by any other LSE Group company under license. “TMX®” is a trade mark of TSX, Inc. and used by the LSE Group under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company›s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

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.

Source: 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.




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