Section Hero Funds

Global Fund

Global Fund

1Q21 Commentary1

As we navigated the first quarter of 2021, certain factors were significant drivers of strong market performance during the period. First, on the health care front, with approximately 30% of the U.S. population over 18 vaccinated at the end of March and daily vaccinations climbing, hopes for a brighter future over the course of 2021 emerged. This increase in vaccinations led to expectations that the economy would continue to re-open through the summer and into the fall, and in fact the United States reported that 916,000 new jobs already were created during the month of March.

Across markets, this effect was evidenced by yields on the 10-year U.S. Treasury Note increasing 83 basis points and sectors that were flirting with bankruptcy in 2020 demonstrating strong market returns. Additionally, concerns about inflation emerged as global supply chains and certain commodity prices, such as lumber, reacted to strong increases in demand from sectors like housing. We, like the Federal Reserve, share the view that inflation pressures will likely prove transient as factories and supply chains are re-started around the world.

Additionally, we believe it is important to remember that the world economy will experience an uneven trajectory in its improvement given a multi-year vaccination timetable. For example, the International Air Transport Association (IATA) recently reduced its estimated 2021 total airline-miles-traveled growth rate from 50% year-over-year to only 26%. We believe the re-setting of expectations like this will emerge across various sectors. Longer-term factors prevalent before the emergence of the pandemic such as aging demographics, global debt, and productivity improvements will re-emerge as moderating forces on inflation expectations. In fact, recent comments from Federal Reserve Chair Powell highlighted the difficulty the U.S. economy had in achieving a 2% target inflation rate despite historically low unemployment levels prior to the pandemic. These forces are not likely to abate in the near future.


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 +8.87% and +0.28%, respectively.

The Marsico Global Fund posted a return of +0.70% for the first quarter, underperforming its benchmark, the MSCI All Country World Index2, which returned +4.57%. 

 

Primary Detractors4: An underweight allocation and stock selection in the Financials sector3 was the largest detractor to performance during the quarter. More specifically, the Fund's lack of exposure to the stronger-performing Banks industry group dampened returns. Stock selection in the Materials and Consumer Discretionary sectors was also weak. Stock selection and an underweight allocation to the Industrials sector created a drag on performance.


Primary Contributors4: 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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Past performance is no guarantee of future results. Recent performance may have been negative.

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