SECULAR GROWTH TRENDS

2020 GLOBAL EQUITY MARKET RETURNS BY QUINTILE

Source: FactSet and MSCI, data from 12/31/2019 to 12/31/2020 based on MSCI All Country World Index. Past performance does not guarantee future results.

Contrary to popular perception, markets were driven by fundamentals in 2020, not euphoria. Companies exhibiting strong growth and quality outperformed companies with opposite characteristics by a wide margin.

FUNDAMENTALS NOT EUPHORIA DRIVE MARKETS

Chart shows that in 2009 the tech sector earnings growth was similar to the MSCI ACWI and MSCI ACWI-ex tech sector, but by 2020, the tech sector had 2.8 times more earnings than the combination of all other sectors in the index.

TECH DOMINATES FOR GOOD REASON

With accelerating adoption of cloud-computing; digital business-to-business applications; and online retail, health care, education/learning, and business services, technology-related company earnings are driving overall earnings growth. Whereas in 2009, investors could gain similar returns with or without investing in tech, today, excluding tech significantly reduces total earnings growth due to tech’s outsized contribution. A strong earnings rebound across most sectors is expected in 2021, with tech continuing to drive strong earnings growth given its increased influence across other sectors.

Source: FactSet, MSCI, Jennison; data from 1/1/2009 to 12/31/2020. Past performance does not guarantee future results.

Earnings Growth Increasingly Driven by Tech

Chart shows returns by quintile based on 1-year Return on Invested Capital, 3-year EPS growth, and 3-year sales growth for the MSCI ACWI index. For each metric, quintile 1, which is the highest growth quintile outperformed quintile 5 which is the lowest growth quintile.