Section Hero Funds

International Opportunities Fund

International Opportunities Fund

3Q19 Commentary1

The third quarter of 2019 was a continuance of themes witnessed earlier in the year. Volatility was elevated in several major asset classes as markets oscillated in reaction to U.S./China trade negotiations, Federal Reserve announcements, and other headline-grabbing events.

Equity markets generally trended positively in July, as the Federal Reserve announced a 25 basis point cut of the Federal Funds rate, marking just the fifth time in the past 25 years that the central bank switched from raising to lowering rates, and the first time since the credit crisis of 2008. Notably, Chairman Powell also said the Federal Reserve will act as appropriate to sustain U.S. economic expansion as it evaluates future data. The continuing trade war with China also remained in the headlines, as a U.S. delegation engaged in goodwill talks with Chinese representatives, causing investors to feel cautiously optimistic about the path forward.

August began with a shock to the markets, as President Trump announced an additional 10% tariff on an additional $300 billion of goods and products coming into the U.S. from China, supplementing the $250 billion of goods already being tariffed at 25%. The Chinese responded by putting a halt to purchases of U.S. agricultural products and letting the Yuan tumble to its weakest level in more than a decade, prompting the U.S. to label China a “currency manipulator.” This led to a sharp drop of over 1150 points in the Dow Jones Industrials Average in the first three trading days of August, and a 3.1% weekly drop in the S&P 500 Index, the worst of the year. Investors were whipsawed for the remainder of the month, but both countries finally agreed to a high-level meeting in October, giving anxious markets some temporary pause.

September then brought Brexit-related uncertainty, a drone attack on major Saudi Aramco oil facilities, and a highly-expected 25 bps cut to the Federal Funds rate. Near the end of the month, markets were again moved by the revelation that House Democrats were launching an impeachment inquiry focused on a telephone conversation between President Trump and the Ukrainian president. In addition, reports surfaced that the Trump administration was looking into limiting U.S. investment in Chinese companies. Needless to say, September was a busy, headline-driven month for investors to digest.


For the quarter, the NASDAQ Composite Index2 gained +0.18% while Japan›s Nikkei 225 Index2 rose +2.92% (in local currency). Equities in Europe were largely negative as the MSCI Euro Index2 dropped -1.99%. Likewise, the MSCI China Index2 was burdened by trade war-related fears, returning -4.73%. The MSCI Emerging Markets Index2 declined a substantial -4.25% during the period.


In terms of the underlying dynamics of equity market performance, growth stocks outperformed that of value stocks, as the MSCI EAFE Growth Index2 and the MSCI EAFE Value Index2 posted returns of -0.45% and -1.74%, respectively.


The Marsico International Opportunities Fund posted a return of -0.11% for the third quarter and outperformed its benchmark, the MSCI EAFE Index2, which returned -1.07%.


Primary Contributors4: Stock selection in the Information Technology, Consumer Discretionary and Materials sectors3 was the largest contributor to performance in the quarter. The Fund also benefitted from an underweight allocation to the weak-performing Materials sector. 


Primary Detractors4: Stock selection in the Financials sector was the largest detractor from performance in the quarter. The Fund had no exposure to the Utilities sector, slightly weakening results.  

  

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


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 MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Growth Index captures large and mid-cap securities exhibiting overall growth style characteristics across Developed Markets countries around the world, excluding the US and Canada. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend. The MSCI EAFE Value Index captures large and mid-cap securities exhibiting overall value style characteristics across Developed Markets countries around the world, excluding the US and Canada. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield. 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. Sources of foreign exchange rates may be different be­tween a portfolio and the benchmarks. 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.

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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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.

UMB Distribution Services, LLC, is the distributor of The Marsico Investment Fund. Check the background of UMB Distribution Services on FINRA's BrokerCheck.

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