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SGA Suffers Q3 Loss Amid Market Shift
2 Jan
Summary
- SGA's Q3 return was -1.3% (Gross), underperforming benchmarks.
- Market favored lower-quality stocks and cyclical industries.
- Apple Inc. contributed positively to SGA's portfolio returns.
Sustainable Growth Advisers (SGA) reported a -1.3% gross return for its U.S. Large Cap Growth Strategy in the third quarter, lagging behind the Russell 1000 Growth Index's 10.5% and the S&P 500 Index's 8.1%. The firm's investment approach, focused on high-quality growth businesses, encountered difficulties as market leadership shifted towards lower-quality stocks and cyclical industries.
Despite the challenging environment for its strategy, Apple Inc. emerged as a positive contributor to SGA's portfolio. The technology giant showcased robust performance across geographies, including a rebound in China, and demonstrated resilient demand for its products. Apple successfully managed tariff impacts and benefited from subsidies in China, even as AI development presented ongoing challenges.
SGA noted that Apple's stock was supported by strong buyback activity and stable valuation. Management provided guidance for mid- to high-single-digit top-line growth in the upcoming quarter. The firm's third-quarter 2025 investor letter also highlighted its investment objective, which seeks mid-teens earnings growth from high-quality businesses with stable revenue and cash flow.
