William Blair Large Cap Growth Strategy Co-Portfolio Managers Jim Golan, CFA, and David Ricci, CFA, recently discussed technology trends they’re exploring with Citywire Selector. Long-term secular shifts in semiconductors, cloud-based computing, and fintech provide attractive opportunities.
The team targets companies in industries where profits are growing at least as fast (and preferably faster) than the U.S. economy.
Golan and Ricci told Citywire Selector there has been an increase in the use of semiconductors in a number of areas, such as autonomous vehicles. As a result, the three- to five-year profit growth for the industry looks appealing relative to the overall market.
That’s one important way they differentiate their approach from those of other quality growth investors—the team targets companies in industries where profits are growing at least as fast (and preferably faster) than the U.S. economy.
The portfolio managers also say cloud-based computing is a compelling trend. U.S. corporations are early in the process of outsourcing their data centers to cloud platform providers. As a result, Golan and Ricci think the industry could grow from around $100 billion today to $300 billion to $400 billion over the next three to four years.
The Large Cap Growth team also seeks companies that could benefit from other long-term secular developments. These include the shift from brick-and-mortar retailing to online retailing, the shift from traditional television to streaming services, and the shift from cash to digital payments. Such long-term trends are likely to underpin above-average industry growth, they believe.
“We look at the profit pools within fintech, whether it is the shift towards networking, towards merging and acquiring, or towards digital payment away from cash,” Ricci told Citywire Selector. “The types of companies involved are … all net beneficiaries of this long-term secular shift.”
The statements and opinions expressed are those of each individual as of the date of publication. This information is subject to change at any time based on market and other conditions and should not be construed as a recommendation of any specific security. The securities discussed in the article do not represent all of the Fund’s holdings. Holdings are subject to change at any time. The holdings mentioned in the article comprise the following percentages of the William Blair Large Cap Growth Fund’s total net assets as of 1/31/2020: Microsoft 9.4%, Amazon.com 7.7%, PayPal 3.6%, Mastercard 3.5%, Fidelity National Information Services 2.0%. For a complete list of the Fund’s holdings, please visit www.williamblairfunds.com.
Standardized Performance (Period ended 12/31/19)
|1 YR||3 YR||5 YR||10 YR|
|William Blair Large Cap Growth Fund (Class I)||36.35%||23.50%||15.61%||15.41%|
|Russell 1000 Growth Index||36.39%||20.49%||14.63%||15.22%|
Performance cited represents past performance. Past performance does not guarantee future results and current performance may be lower or higher than the data quoted. Returns shown assume reinvestment of dividends and capital gains. Periods greater than one year are annualized. Investment returns and principal will fluctuate with market and economic conditions and you may have a gain or loss when you sell shares. For the most current month-end performance information, please call +1 800 742 7272, or visit our Web site at www.williamblairfunds.com. Class I shares are available to investors who meet certain eligibility requirements.
Expense ratio (gross/net): 0.80%/0.65%. The Fund’s Adviser has contractually agreed to waive fees and/or reimburse expenses to limit fund operating expenses until 4/30/20.
The Russell 1000® Growth Index consists of large-capitalization companies with above average price-to-book ratios and forecasted growth rates. Indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly.
The Fund’s returns will vary, and you could lose money by investing in the Fund. The Fund invests most of its assets in equity securities of large cap domestic growth companies where the primary risk is that the value of the equity securities it holds might decrease in response to the activities of those companies or market and economic conditions. Individual securities may not perform as expected or a strategy used by the Adviser may fail to produce its intended result. Different investment styles tend to shift in and out of favor depending on market conditions and investor sentiment, and at times when the investment style used by the Adviser for the Fund is out of favor, the Fund may underperform other equity funds that use different investment styles.