Section Hero Funds

Global Fund

Global Fund

4Q18 Commentary1

The fourth quarter of 2018 was turbulent and resulted in a major reset for stock prices and other asset classes around the globe. The continued drumbeat surrounding U.S./China bi-lateral trade tariffs, along with the impact of rising interest rates on industries like housing and automobiles, have raised anxiety over a potential monetary policy error by the Federal Reserve. In addition, concerns that broader economic growth may slow also weighed on the markets. The fourth quarter was particularly difficult for growth stocks, which had led the broader market higher for much of the year, and thus were the first to be sold as investors became nervous.

 

For the quarter, the S&P 500 Index fell -13.52% and the NASDAQ Composite Index2 fell -17.29%. Japan's Nikkei 225 Index2 was down -16.82% (in local currency). Equities in Europe followed suit. The MSCI Euro Index2 was down  13.20% and the MSCI China Index2 declined by -10.73%. The MSCI Emerging Markets Index2 fell by -7.47%.

 

In terms of the underlying dynamics of equity market performance, although performance was in the red across the board, value-oriented stocks were “less bad” than their growth counterparts as the MSCI ACWI Value Index2 and the MSCI ACWI Growth Index2 posted returns of -10.74% and -14.66%, respectively.

 

The Marsico Global Fund posted a return of -19.56% for the fourth quarter and underperformed its benchmark, the MSCI All Country World Index2, which returned -12.75%.

 

Primary Detractors5The largest detractor from performance during the quarter was stock selection in the Communication Services sector4. Similarly, stock selection was weak in the Health Care and Consumer Discretionary sectors. An overweight posture to the weak-performing Information Technology sector detracted from results, as well as an underweight posture to the Consumer Staples sector.

 

Primary Contributors5: The Fund benefitted by maintaining an elevated allocation to cash and cash equivalents, with ~8% on average and ~6% at the end of the period. Having a lack of investment in the weakest-performing sector of the benchmark index, Energy, helped performance.

 

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 (DM) countries and 23 Emerging Markets (EM) 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 23 Emerging Markets (EM) 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. With 1,298 constituents, the index targets 50% coverage of the free float-adjusted market capitalization of the MSCI ACWI Index. 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. The DAX Index is a stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of average trading volume. 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. 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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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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