Section Hero Funds

21st Century Fund

21st Century Fund

4Q20 Commentary1

The fourth quarter of 2020 continued with much of the drama we witnessed throughout the year. Joe Biden won a highly-contested U.S. Presidential election, several companies received FDA approval for their COVID-19 vaccines, and a much-delayed fiscal stimulus package was agreed upon. In addition, the Federal Reserve indicated it stands willing to do whatever it takes to support the economy. At the same time, COVID-19 cases continued to increase around the world although daily new cases may have peaked in some areas, there are fears of further political unrest in the nation›s capital, and investors closely watched the Democratic victories in the Georgia senate races, which are expected to increase the likelihood of future stimulus packages coming to fruition. Under these headlines, equity markets were again positive for the quarter, and ended 2020 at or near all-time highs.

The major catalyst for the strength in equities, as well as the rotation in the market from “growth” into “value” names perceived to benefit more from a future re-opening of the economy, is believed to be the positive vaccine-related news received during the month. Both pharmaceutical company Pfizer, Inc. and biotechnology company Moderna, Inc. proved their vaccines to be effective in preventing COVID-19 and quickly received emergency use authorization from the FDA.

We continue to monitor the status of the COVID-19 pandemic on a daily basis by looking at the number of new positive cases, the percent of tests coming back positive, hospitalizations, and overall hospital capacity. Following the approval of several COVID-19 vaccines, we began to track production and administration timelines, as well as the number of vaccines administered, at the country, state, and municipal levels. In the fourth quarter, we saw absolute levels of new cases, hospitalizations, and fatalities reach new highs across the United States and other regions across the globe. Fortunately, the rate of hospitalizations and mortalities have declined consistently from the highs seen in the spring of 2020. 

In other market-moving headlines, in late December President Trump signed into law a $2.3 trillion COVID-19 pandemic aid package. Of this $2.3 trillion, $900 billion is earmarked for small business relief (including $284 billion to replenish the Paycheck Protection Program, or “PPP”), direct checks, unemployment benefits, schools, and vaccine support efforts. In addition, President-elect Biden recently released his additional stimulus plan, likely to be the first major policy under his new administration. The plan is targeting direct payments, unemployment insurance, aid for states and municipalities, and a national vaccination program.

Following strength in national employment statistics during October and November, the December jobs number showed a loss of 140,000 jobs, the first month of job losses since early in the pandemic. The likely cause of this halt in job creation was mounting state and municipal restrictions on virus-sensitive businesses, such as bars and restaurants. However, investors largely shrugged off this drop, likely in anticipation that it strengthened the case for more stimulus from Congress. In addition, we believe this reduction is likely temporary and should reverse as COVID-19 vaccine distribution accelerates this spring.

In terms of market capitalization, small cap stocks finished a remarkable year as the Russell 20002,3 index posted a +31.37% fourth quarter return, while large cap stocks paled in comparison with the Russell 10002,3 index return of +13.69%. A smaller gap of outperformance was present among investment styles, although value stocks were clearly in favor. The Russell 1000 Value2,3 and the Russell 1000 Growth2,3 indexes posted quarterly returns of +16.25% and +11.39%, respectively.

The Marsico 21st Century Fund posted a return of +23.34% for the fourth quarter, handily outperforming its benchmark, the Russell Midcap Growth Index2,3, which returned +19.02%.

 Primary Contributors5: Stock selection in the strongest-performing sector4 of the benchmark index, Communication Services, had the largest positive impact on performance during the quarter. Stock selection was also strong in several other sectors including Consumer Discretionary, Industrials, Financials, and Information Technology. A lack of exposure to the weakest-performing sector of the index, Consumer Staples, contributed positively to results.

 Primary Detractors5: Weak stock selection in the Real Estate sector had the largest negative effect on performance during the quarter. The Fund incurred a minor opportunity cost by maintaining an average cash position of approximately 1%, while the benchmark index returned +19%.

For more information, please click here for the Marsico 21st Century 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 Russell Midcap Growth Index (the “Underlying Index”) measures the performance of the mid-capitalization growth sector of the U.S. equity market, and is composed of mid-capitalization U.S. equities that exhibit growth characteristics. It is a subset of the Russell Midcap® Index, which measures the performance of the mid-capitalization sector of the U.S. equity market. The Underlying Index measures the performance of equity securities of Russell Midcap Index issuers with higher price-to-book ratios and higher forecasted growth.  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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