3Q2025 - International Growth Commentary
Despite volatility and divergence from benchmark returns, we maintained our disciplined focus on competitively advantaged businesses with strong long-term earnings visibility
The third quarter of 2025 presented a challenging environment for concentrated quality growth strategies, with the International Growth Composite Portfolio underperforming the MSCI ACWI ex US Index. Despite volatility and divergence from benchmark returns, we maintained our disciplined focus on competitively advantaged businesses with strong long-term earnings visibility. Select portfolio adjustments—both additions and exits—were aimed at optimizing exposure to enduring growth opportunities across global markets, as structural shifts in technology and sector leadership continued to reshape the investment landscape.
- The International Growth Composite Portfolio (the “Portfolio”) underperformed the MSCI ACWI ex US Index in Q3 2025. Our concentrated focus on high-quality growth stocks was challenged in a market environment that favored high-beta and AI-related sectors, leading to increased share price volatility.
- Sector allocations continued to be the result of bottom-up research, with positive relative impact from overweights in Healthcare and lack of Consumer Staples, partially offset by headwinds in Information Technology and Consumer Discretionary.
- Shopify, ASML, and ICON plc were the top contributors to performance, benefiting from strong business results, durable growth, and favorable end-market dynamics.
- Weakness in Sage Group, Monday.com, and SAP weighed on returns, with market concerns about software innovation, conservative outlooks, and prolonged sales cycles affecting share prices despite strong business fundamentals.
- We initiated new positions in Disco Corp, ASM International, and Tencent Holdings, funded by exiting our position in Dassault Systèmes. These changes are part of our ongoing strategy to optimize the portfolio and concentrate on companies poised for strong, long-term growth in international markets.
- The Portfolio remains intentionally concentrated, reflecting our disciplined focus on companies with durable business models and the potential for superior long-term earnings growth.