Section Hero Funds

Global Fund

Global Fund

3Q20 Commentary1

Coming off one of the biggest drops in economic activity in history during the second quarter, we opened the third quarter with a strong recovery in both economic indicators and equity markets in general. However, as we sit here today, COVID-19 cases are increasing in Europe and many parts of the U.S., the President and numerous White House staff have recently tested positive for the virus, another fiscal stimulus package has reached a stalemate, and we are witnessing continued social unrest ahead of the approaching Presidential election. In spite of these September headwinds, equity markets posted a strong positive quarter. 

Given the impact the COVID-19 pandemic has had on our lives over the past several months, we have been monitoring various data points on a daily basis related to the progression of the virus. These include the number of new positive cases, the percent of tests coming back positive, hospitalizations, and overall hospital capacity. We track this data at the country, state, and municipal levels. Interestingly, from mid-June to the end of July, we saw daily case growth and hospitalizations more than double, and while new cases surpassed the prior peak in the first quarter, peak hospitalizations remained similar. We believe this can be attributed to improvements in treatments and testing, a better prepared health care system, and younger, generally healthier age cohorts representing a larger percentage of those testing positive. During August, positive cases and hospitalizations came down considerably, however, we are now seeing signs of a resurgence in positive case growth, primarily in Europe and in several U.S. regions, which we will continue to monitor. By performing these analyses, we have sought to position our portfolios to reflect the impact that changes in the progression of the virus may have on our holdings.

In fiscal policy news, politicians continued to jockey over a stalled fifth COVID-19-related relief package. All in, the proposed price tag is now estimated to be in the $1.6 trillion range. Although a pre-election compromise on an entire relief package doesn›t appear likely, as of this writing, smaller relief legislation targeted at particularly vulnerable industries, such as airlines, is being discussed. Although the two sides appear to remain far apart when it comes to the size, scope and timing of a comprehensive stimulus bill, we expect an eventual compromise on a package or another significant package post-election.

On the monetary side, Federal Reserve Board Chairman Powell stressed that the Fed remains committed to using its tools to do what it can, for as long as it takes, to ensure the economic recovery will be as strong as possible. He also reiterated that, despite the extent of the recovery thus far, the path ahead for the economy remains “highly uncertain.” Powell has repeatedly said that more fiscal support is needed, and that “even if policy actions prove to be greater than needed, they will not go to waste.”

On the health care front, antiviral drugs such as Gilead Science›s remdesivir have become more widely available and we continue to witness progress on the race for a vaccine. In late September, Johnson & Johnson (J&J) announced that it had begun phase three trial testing of its potential COVID-19 vaccine. J&J is the fourth drug maker backed by the Trump administration›s vaccine program “Operation Warp Speed” to enter late-stage testing. The others are Moderna, Pfizer and AstraZeneca. This development coincides with President Trump›s speculation that the U.S. could find a safe and effective vaccine this Fall and have enough vaccine doses to inoculate every American by April 2021, although some health care experts are skeptical that those goals can be met.

After national employment statistics bounced back strongly in the second quarter, with the June jobs number reflecting an all-time record increase, employment gains slowed during the third quarter. Although July and August each posted more than a million new payroll jobs, September job gains totaled 661,000, the smallest gain since May of this year, suggesting the U.S. labor market has been losing a bit of traction, as noted by Fed Chairman Powell in recent testimony in the U.S. Senate. In September the unemployment rate fell to 7.9%, a drastic improvement since the crisis began, although still higher than the historical average.

In terms of the underlying dynamics of equity market performance, growth equities significantly outperformed their value equities in the quarter, as the MSCI ACWI Growth Index2 and the MSCI ACWI Value Index2 posted returns of +12.00% and +3.97%, respectively.

The Marsico Global Fund posted a return of +12.08% for the third quarter and significantly outperformed its benchmark, the MSCI All Country World Index2, which returned +8.13%. 


Primary Contributors4: Strong stock selection and an overweight allocation to the Information Technology sector3, one of the strongest-performing sectors of the benchmark index, had the largest positive impact on performance during the quarter. The Fund maintained zero exposure to the weakest-performing sector of the benchmark index, Energy, contributing to results. An underweight allocation to the Financials sector boosted returns. An overweight allocation to the strongest-performing sector of the benchmark index, Consumer Discretionary, also aided returns.

Primary Detractors4: Stock selection in the Health Care sector was weak and had the largest negative impact on performance during the quarter. The Fund incurred an opportunity cost by maintaining zero exposure to the strong-performing Industrials sector, dampening results.


For more information, please click here for the Marsico Global 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 MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI Growth Index captures large and mid cap securities exhibiting overall growth style characteristics across 23 Developed Markets countries. 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 ACWI Value Index captures large and mid cap securities exhibiting overall value style characteristics across 23 Developed Markets countries and 26 Emerging Markets countries. 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. 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. 

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.

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