4Q2024 - Focus Growth Commentary
Since its inception in 1989, Focus Growth has consistently aimed to achieve mid-teens returns driven by mid-teens earnings growth over the long term—our historical record bears this out. Our commitment remains steadfast: to focus on this disciplined approach rather than tailoring the Portfolio to align with the prevailing market narrative, which can, and often does, change quickly.
- Over the past two years, U.S. equities have enjoyed a historic performance run. The Russell 1000 Growth Index was up +91% cumulatively from 2023-2024, marking the best two-year stretch since its 1987 inception. The seven highest two-year returns for the Index have come either in the last five years or during the late 1990s technology bubble (roughly 1995-2000).
- In the fourth quarter of 2024, the Polen Focus Growth Composite Portfolio outperformed the S&P 500 Index, but underperformed the Russell 1000 Growth Index.
- The recent Russell 1000 Growth returns have been heavily impacted by the "Magnificent 7," now representing 56% of its weight, while the top ten holdings together make up over 60% of the Index. While the Magnificent 7 has lived up to its lofty moniker, we've reached a point in recent quarters where this growth slowed.
- The top relative contributors to the Portfolio’s performance were Shopify, Amazon, and ServiceNow. The top absolute contributors were Amazon, Shopify, and Netflix.
- The largest relative detractors were Tesla (not owned), Thermo Fisher Scientific, and Broadcom (not owned). The largest absolute detractors were Thermo Fisher Scientific, Zoetis, and Adobe.