International and Global Growth Equities Commentary & Market Outlook

Market Recap

The global economy remains in a fragile state. Headline inflation is above-target in almost all major economies, and core inflation is sticky and elevated. As inflation pressures persist, economic growth has been weighed down by the lagged and ongoing effects of monetary tightening. From a regional perspective, the brighter spots in the global economy are the fast-growing major Asian economies including China, India, and Southeast Asia. On the other hand, growth in the major developed economies such as the U.S., Europe, and Japan are poised to be much more lukewarm.

Something else to note is that growth style stocks underperformed value style stocks in both international developed and emerging markets. However, this was not the case in the U.S. market, where growth style stocks significantly outperformed value style stocks. The market leadership in the U.S. was concentrated in a small number of mostly mega-cap tech stocks, and it is for this reason that the U.S. market also significantly outperformed international markets in the quarter.

Our investment philosophy emphasizes businesses that benefit from secular trends and possess strong competitive advantages and market positions. Additionally, portfolio companies are purposefully selected that earn attractive profit margins, carry strong balance sheets, and generate cash on a consistent basis. We believe these attributes hold tack even if the macro backdrop is deteriorating. For these reasons, portfolios have the ability to outgrow market growth rates over the long-term.