Section Hero Funds

Global Fund

Global 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 the underlying dynamics of equity market performance, value equities significantly outperformed their growth counterparts in the quarter, as the MSCI ACWI Value Index2 and the MSCI ACWI Growth Index2 posted returns of +16.63% and +13.09%, respectively.

The Marsico Global Fund posted a return of +8.21% for the fourth quarter and significantly underperformed its benchmark, the MSCI All Country World Index2, which returned +14.68%.

 

Primary Detractors4: Stock selection in the Consumer Discretionary3 sector was the largest detractor to performance during the quarter, particularly in the Retailing industry group. Stock selection in the Communication Services sector detracted from performance as well. The Financials sector created a headwind by maintaining an underweight allocation and with weak stock selection in the Diversified Financials industry group. Overall currency effect created a drag on performance as well.


Primary Contributors4: Strong stock selection and an overweight allocation to the Information Technology sector, one of the stronger-performing sectors of the benchmark index, had the largest positive impact on performance during the quarter. The Fund maintained an underweight allocation to two of the weaker-performing sectors of the benchmark index, Consumer Staples and Health Care, which contributed positively to 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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