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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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SGA - International Growth 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (SGA - International Growth)

Primary Source Intelligence • Q3 2026 Letter Analysis

SGA - International Growth Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, SGA - International Growth. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+1.1%

YTD-2.6%

Annualized+5.7%

Positioning StanceCONSTRUCTIVE

Market CapLarge Cap

GeographyGlobal, Emerging markets

Digest Analysis

Quick Take

"Elevated yields and energy shocks are puncturing speculative momentum, accelerating rotation toward durable compounders at steep valuation discounts. Selective exposure across enterprise software and power infrastructure offers self-funded double-digit earnings growth."

Executive Summary

The SGA International Growth portfolio generated a net return of 1.1% in the third quarter of 2026, outperforming the MSCI ACWI ex USA Net Total Return Index return of 0.5% and the MSCI ACWI ex USA Growth Net Total Return Index decline of -2.5%. Year-to-date, the strategy has returned -2.6% net of fees. The portfolio remained fully invested with minimal cash exposure, deriving significant positive stock selection from Information Technology holdings, which generated 2.8% in selection effect, while Financials and Materials represented the primary sector headwinds. Macroeconomic headwinds intensified across multiple fronts during the quarter as crude oil surpassed $100 per barrel, 10-year Treasury yields climbed above 5%, and the Federal Reserve shifted from hold to hike. These conditions precipitated a sharp unwinding of crowded momentum trades in July. Management maintains that rising borrowing costs and local grid constraints will decelerate speculative artificial intelligence capital spending, favoring profitable compounders that trade near historically steep valuation discounts relative to the broader international benchmark. Portfolio activity reflected rigorous selectivity within secular growth areas. Management initiated a new holding in Delta Electronics to capitalize on critical power and thermal bottlenecks in artificial intelligence servers, while trimming SAP, Recruit, and Sage plc into operational strength. To fund these additions and optimize portfolio growth characteristics, the fund completely liquidated Universal Music Group following decelerating subscription trends and increased capital outlays, and exited Infosys due to slowing digital enterprise spending.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

Management maintains clear portfolio tiering and disciplined capital re-allocation, demonstrating high conviction by completely liquidating longstanding positions like Universal Music Group and Infosys when growth visibility deteriorated, while aggressively initiating Delta Electronics. Sizing remains distributed across approximately 34 names rather than an ultra-concentrated 10-stock book.

Growth Outlook

60%

BearishBullish

Neutral (60%)

Constructive medium-term optimism is anchored by portfolio holdings trading near their steepest historical valuation discount to the MSCI ACWI ex USA benchmark. However, this is tempered by prudent caution regarding oil over $100, 10-year Treasury yields surpassing 5%, and broader macroeconomic volatility.

Risk Appetite

55%

DefensiveAggressive

Balanced (55%)

Capital remains fully committed to high-quality growth equities with negligible cash holdings, but portfolio construction intentionally eschews cyclical leverage and speculative AI memory plays in favor of self-funded, defensive compounders.

Capital Deployment

55%

De-riskingDeploying

Net Neutral (55%)

Deployment was net neutral as new capital commitments in Delta Electronics, Schneider Electric, Disco, and TSMC were entirely funded by trimming outperformers such as SAP, Recruit, and Sage and liquidating UMG and Infosys.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

Management actively redirected proceeds from trimmed software winners and liquidated holdings into high-conviction AI infrastructure bottlenecks like Delta Electronics and TSMC, signaling an active bias toward selective fundamental reinvestment.

Language Signal

60%

BearishBullish

Balanced (60%)

Narrative commentary balances warnings of decelerating capital expenditure, oil shocks, and monetary tightening against high confidence in holdings generating 12% revenue and 17% earnings growth over the next three years.

Perceived Risk

68%

Low RiskElevated

Elevated Risk (68%)

The commentary highlights elevated systemic macro risks including surging long-term interest rates, hot inflation prints, Middle East geopolitical conflict, and growing regulatory resistance to data center buildouts.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The team identifies highly attractive, idiosyncratic valuation anomalies within enterprise software and power distribution equipment, while explicitly filtering out wide swaths of cyclical, indebted, or speculative growth assets.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Explicit emphasis is placed on 3- to 5-year investment horizons that look through short-term momentum factor swings to capture fundamental compounding in cash flows and earnings.