ONC - Baird Q4 2024 International And Global Growth Fund Commentary

2025-01-16 22:55:00 ET

Summary

• In the fourth quarter of 2024, the Baird Chautauqua International Growth Fund Net Investor Class returned -4.31%, outperforming the MSCI ACWI ex-U.S. Index® ND, which returned -7.60%.
• Central bank updates signaled monetary policy remains on an easing path, but the pace of rate cuts may be slower or shallower than recently anticipated.
• For the MSCI ACWI ex-U.S. Index, growth style slightly underperformed value style.
• Takeaways from the December Fed meeting were more hawkish than presumed.

Market Recap

Central bank updates signaled monetary policy remains on an easing path, but the pace of rate cuts may be slower or shallower than recently anticipated. The Federal Reserve (Fed) decision has led the way in this regard amid persistent inflation concerns, with the Fed updating its forecast to just two rate cuts in 2025. Additionally, following the Trump presidential victory, there has been a growing focus on his trade policies and election pledges, which many have viewed as inflationary and possibly leading to higher-for-longer rates. U.S. equities substantially outperformed international equities given this backdrop during the fourth quarter. Despite these headwinds, we managed to protect on the downside in the International portfolios, mostly due to our stock selection.

Our investment approach emphasizes a long-term perspective, allowing us to navigate short-term economic fluctuations. We focus on businesses that align with secular trends and have strong competitive advantages and market positions. The companies in our portfolios are selected for their high profit margins, strong balance sheets, and consistent cash generation. We believe these attributes will endure even in adverse macroeconomic conditions. Our concentrated, conviction-weighted portfolios aim to outperform market growth rates over an investment cycle. Furthermore, our portfolios are diversified across a broad spectrum of secular growth themes. For example, among the top ten holdings of our International strategy, in addition to holdings in AI, themes include electronic payments, industrial automation, financial services in emerging markets, e-commerce, mobile gaming, and digitalization....

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