Chautauqua Global Growth Strategy

OVERVIEW

The Chautauqua Global Growth Strategy invests in equity securities of both U.S. and non-U.S. companies with large market capitalizations. The strategy will normally be diversified among at least three different countries, including the United States. The strategy invests primarily in developed markets but may invest in emerging and less developed markets. The portfolio contains high-quality companies that employ better governance and disclosure, more conservative accounting, less financial leverage and “best-in-class” management. This reduces the risk of negative surprises and mitigates the risk of loss, which is a primary concern. In addition to generating high risk-adjusted returns, the approach creates upside market participation and downside protection.

Portfolio Construction

  • Concentrated portfolio of generally 35–45 stocks
  • Positions are typically 1–6% at the time of purchase 
  • Market caps in excess of $5 billion at the time of purchase 
  • Sector weights limited to 50% of portfolio 
TEAM

For more information, contact David Lubchenco or the Intermediary Specialist in your region.

COMMENTARY

Q4 2016 International and Global Growth Equity Strategies

The fourth quarter of 2016 represented the completion of an 11 year performance record for the Chautauqua Capital International Growth Strategy and a 10 year performance record for the Chautauqua Capital Global Growth strategy. Over this time period, as the investment process has been consistently applied, the portfolios have exhibited certain traits. The portfolio generally holds up well when growth styles are not in favor, for example. This past quarter however, it did not. Rather, we have just turned in one of the worst periods of relative performance in the long history of our performance. We are deeply disappointed by these results and we would expect that our clients are too. How did this happen?

The quarter began with a shift from the growth style preference of the third quarter to a value style preference. This appeared to be a short-term reversal, which has been typical in the “risk on risk off” markets of the past 8 years. Then, in early November, despite polls predicting up to 24 hours prior the opposite, Donald Trump became the surprise winner of the U.S. Presidency. The subsequent market rally, based upon the expectation of U.S. fiscal stimulus, deregulation, and improved profits (due to lower tax rates assured by a unified Republican Federal Government, combined with Fed rate hikes), took off, leaving large capitalization, quality growth investors (like us) behind.

In this environment, the Chautauqua Capital International Growth Equity composite declined 6.19%, underperforming the MSCI ACWI ex-U.S. Index®, which declined by 1.20%, and underperforming the MSCI EAFE Index®, which declined 0.68%. The Chautauqua Capital Global Growth Equity composite declined 5.50%, underperforming the MSCI ACWI Index®, which increased 1.30%.

Read Full International and Global Commentary