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Polen Capital Management - Ongoing Fundamental Strength

Posted by WrapManager's Investment Policy Committee
April 26, 2016


Polen Capital Management's Focus Growth Portfolio continues to deliver solid double‐digit earnings per share growth, which is quite distinct from the broader market right now. Read their quarterly commentary to learn how their team believes this strong ongoing earnings per share growth will continue to support strong long‐term investment returns.


The relatively flat returns for the first quarter belie what was a very volatile start to the year. The Indices were down about 6% during the first week of trading in 2016 and down more than 10% in mid‐February before recovering to deliver positive returns by quarter end. The intra‐quarter market volatility was very similar to the share price volatility seen during the second half of 2015 when the Indices were down more than 5% in the third quarter and rose more than 7% in the fourth quarter. Market participants seem to be concerned with deteriorating earnings and relatively high valuations, but also confounded by the lack of attractive return potential from other asset classes.

From a fundamental perspective, the modest but positive market return during the first quarter was a relative win given that S&P 500 earnings are now expected to decline in the high single digits during the quarter. This was a significant deterioration versus expectations for growth at the beginning of the quarter, which has pulled down full‐year 2016 revenue and earnings growth expectations to low single digits. Although our Portfolio return was slightly below the benchmarks during the first quarter, our Portfolio continues to deliver solid double‐digit earnings per share growth. As you can see in the chart on the report, our Portfolio has delivered much stronger earnings per share growth than the broader market during the past five years. As we have stated many times before, we believe that underlying earnings per share growth is the primary driver of our investment returns over time. We feel confident that the ongoing fundamental strength of our Portfolio continues to position us very well going forward. Download below to read full report. 

To learn more about the Polen Capital Large Cap Growth and other Money Managers, give us a call at 1-800-541-7774 or contact us here to speak with one of WrapManager's Wealth Managers.

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