Section Hero Funds

Global Fund

Global Fund

3Q21 Commentary1

While year-to-date performance remains strong, at the end of September broad U.S. indices were largely unchanged from the previous quarter. U.S. markets showed strong performance in July and August followed by increased volatility and declines in September as heightened concerns on several fronts moved to the fore. 

 

The long dance with COVID-19 continues around the world with the Delta variant and its increased virulence throwing a curveball in reopening plans across the globe over the quarter. While we continue to anticipate a “two steps forward, one step back” recovery, vaccination trends across both developed and developing countries continue a steady march upward and novel anti-viral medications are on the horizon. Progress in managing COVID-19 is an essential precursor to normalizing global supply chains, which have been a significant detractor to economic progress worldwide. Despite strong demand from both consumers and businesses, inventory levels and related capital expenditures are at multi-year lows and pricing pressure is building within supply chains. The economic impact on certain industries has been significant. For example, it is estimated that the automobile industry has lost over $200 billion in global new car sales this year due to shortages of semiconductors and other parts, which have led to inflated prices for both new and used cars. With close to 80 vessels essentially parked off the western coast of the U.S. waiting to be unloaded, we were heartened that President Biden recently announced a public/private partnership to accelerate the unloading of the container ships over roughly the next 90 days. While the backlog will take several months to reallocate across the distribution and production network, we anticipate that the global supply chain will over the next several quarters return to a more balanced state which will benefit enterprises and economies around the world.


Developments in China over the past several months have also contributed to heightened uncertainty. The Chinese government's goal of “common prosperity” has ushered in a series of policy changes which have led to significant fines and restrictions in certain industries. In sectors like Real Estate, the resolution of the Evergrande Group's financial woes and related enterprises hangs over regional financial markets. Recently, rolling power outages and increased tensions with Taiwan have only added to the level of concern amongst investors. We remain highly selective in our positioning in the region, investing via established, diversified, multi-national companies over locally listed companies at this juncture.


In the U.S., President Biden and a fractured Democratic party in Congress face a series of issues, not the least of which is passing a budget reconciliation bill and debt ceiling package that may define the party for the next several years. On the positive side, U.S. consumers are in a strong financial position with cash balances up 50% year over year to approximately $2.5 trillion. Similarly, company cash levels are at record levels and the normalizing economy should usher in the rebuilding of inventory levels which are at 25 year lows relative to sales, and spur a wave of various capital expenditures and trillions of dollars in annual cash distributions in the form of share repurchases and dividends over the coming years.


While there are several cross-currents across the globe as we come to a close on 2021, we are looking forward optimistically into 2022. The need for innovation to meet emerging needs across the globe is more apparent than ever. We are attempting to position your portfolio with an emphasis on growth-oriented equities which should benefit from the normalizing of trends highlighted above, while remaining committed to the further development and build-out of the internet and increasing digitization of the economy. While we expect some market volatility over the coming months, we maintain our view that a portfolio of appropriately-valued, high-quality, disruptive franchises will navigate the market effectively and drive disproportionate outperformance over the long term.


In terms of the underlying dynamics of equity market performance, growth equities significantly outperformed their value counterparts in the quarter, as the MSCI ACWI Growth Index2 and the MSCI ACWI Value Index2 posted returns of -0.72% and -1.38%, respectively.

The Marsico Global Fund posted a return of -2.59% for the third quarter, underperforming its benchmark, the MSCI All Country World Index2, which returned -1.05%. 

 

Primary Detractors4: Stock selection in the Information Technology3 sector had the largest negative impact on performance for the quarter, most specifically in the Software & Services industry group. While stock selection in the Consumer Discretionary sector was positive, the Fund was penalized by maintaining an overweight allocation (more than double than that of the benchmark index) as this was the weakest-performing sector of the benchmark index. Stock selection and an underweight allocation to one of the stronger-performing areas of the benchmark index, Financials, created a headwind.


Primary Contributors4: Stock selection in the Communication Services industry group was a bright spot for performance during the quarter, specifically in the Media & Entertainment industry group. Stock selection in the Consumer Discretionary sector also contributed positively to performance as select holdings returned more than +10% for the period.


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 and 27 Emerging 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 27 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.

Please consider the Fund's investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information about the Fund, click here or call 888-860-8686. Please read the prospectus carefully before investing.

Investments in mutual funds carry risks and investors may lose principal value. Click here for the principal risks of investing in the Funds. Please read the prospectus carefully before investing as it explains the risks associated with investing in the mutual funds.

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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