Commentary
4Q2024 - Global Growth Commentary
Looking ahead, we remain confident in the long-term growth prospects of our holdings. As the focus transitions from the infrastructure build-out phase to monetizing AI at the application layer, we believe our Portfolio is well-positioned to capitalize on these opportunities and deliver durable mid-teens earnings growth.
- Over the past two years, global equities delivered a historic +45% cumulative return (2023-2024) per the MSCI ACWI Index, highlighting what we view as the unpredictability of markets and the futility of making macroeconomic predictions.
- In the fourth quarter of 2024, the Polen Global Growth Composite Portfolio (the “Portfolio”) returned 2.58%, gross of fees, and 2.27% net of fees, outperforming the Index return of -0.99%.
- The top relative contributors to the Portfolio’s performance were Shopify, Amazon, and Paycom Software. The top absolute contributors were Amazon, Shopify, and Alphabet.
The largest relative detractors in the quarter were ICON plc, Novo Nordisk, and Adobe. The largest absolute detractors were ICON plc, Novo Nordisk, and L’Oreal. - We initiated a new position in CoStar Group during the quarter and eliminated positions in LVMH and CSL. We also added to positions in Oracle and Novo Nordisk and trimmed positions in Airbnb and Alphabet.
- The Index's strong performance over the past two years was driven by historic concentration in the Magnificent 7 companies, which now account for 20% of its market value and over 40% of its return, primarily fueled by the AI investment boom.
- We believe AI presents a meaningful long-term opportunity for the advantaged software and cloud businesses we own, though its current contribution to their revenues and profits remains modest compared to the explosive growth seen earlier in the supply chain.