Section Hero Funds

Growth Fund

Growth Fund

1Q19 Commentary1

After a difficult fourth quarter of 2018, the first quarter of 2019 saw a strong reversal of sentiment on the back of two major developments. First, and perhaps most importantly, the Federal Reserve changed course during the quarter and now anticipates only one Federal Funds interest rate increase through 2021, which is a stark contrast to the six interest rate hikes U.S. Federal Reserve Chairman Powell discussed in October during his now infamous “far from neutral” speech. Second, there are early indications that China›s aggressive stimulus efforts are working and contributing to a stabilization of economic conditions. When combined with improved prospects for a comprehensive U.S./China trade deal, the markets appear to anticipate an overall improvement in the Chinese landscape. On a company-specific level, the holdings in the Fund generally reported strong fourth-quarter earnings during the first quarter, and our strategy of finding companies that can grow in various economic environments remains our main focus.

For the quarter, the S&P 500 Index2 gained +13.65% and the NASDAQ Composite Index2 gained +16.81%. Japan's Nikkei 225 Index2 rose +6.70% (in local currency). Equities in Europe and China followed suit as the MSCI Euro Inde
x2 was up +9.80% and the MSCI China Index2 returned +17.69%. The MSCI Emerging Markets Index2 gained +9.91%.

 

In terms of market capitalization, small capitalization stocks fared slightly better than large capitalization stocks during the quarter as the Russell 10002,3 and Russell 20002,3 indexes posted quarterly returns of +14.00% and +14.58%, respectively. A larger gap of outperformance was present between growth and value stocks as the Russell 1000 Growth2,3 and the Russell 1000 Value2,3 indexes posted quarterly returns of +16.10% and +11.93%, respectively.


The Marsico Growth Fund posted a return of +16.56% for the first quarter and outperformed its benchmark, the S&P 500 Index, which returned +13.65%.

 

Primary Contributors5: Stock selection and an overweight allocation to the Information Technology sector4 was the primary contributor to performance during the quarter. Stock selection was also strong in the Consumer Discretionary and Health Care sectors contributing to overall outperformance. 

 

Primary Detractors5: As the benchmark index gained more than +13% in the quarter, the Fund incurred an opportunity cost by maintaining a slightly elevated allocation to cash and cash equivalents (the Fund had ~3% in cash and cash equivalents at the end of the period). Stock selection in the Financials sector was weak, which dampened returns.

 

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 Nikkei 225 Stock Average Index is a price-weighted average 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 a portfolio and the benchmarks. The MSCI Euro Index captures large cap representation across the 10 Developed Markets countries in the EMU. With 123 constituents, the index covers approximately 70% of the free float-adjusted market capitalization of the EMU. The MSCI China Index captures large and mid cap representation across China H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). With 153 constituents, the index covers about 85% of the China equity universe. The MSCI Emerging Markets (EM) Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries. With 846 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. 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.

 

 

 

Investment Insights and Performance

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The International Opportunities Fund may, at times, experience higher-than-average portfolio turnover which may generate significant taxable gains and increased trading expenses which in turn may lower the Fund’s return.

Past performance is no guarantee of future results. Recent performance may have been negative.

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