For the month, the International Growth Fund was up +7.3%, vs the benchmark (S&P Global LargeMidCap Index, 50% hedged into NZD) which was up +5.2%. Companies that meaningfully influenced portfolio returns were:

Gartner (+31%), a leading IT research business, had a very strong month on the back of a solid earnings report that was well-received by the market. New business wins accelerated following several quarters of cautious spending by tech vendor customers. Enterprise customers (which make up most of the research segment revenue) showed continued resilience, growing mid-teens year-on-year, supporting management’s view around the essential nature of this research.

Salesforce (+25%) had a strong month and reported solid earnings at the end of November. Salesforce met revenue expectations, but its operating profit margins were the standout in the quarter. Salesforce continues to expand margins rapidly as the company is undergoing a period of expense growth rationalisation, like other companies in the tech space. Operating profit margins have expanded to 17.2% from 5.9% a year ago, demonstrating very high incremental margins for the business and its ability to protect profits when sales growth slows.

Danaher (+16%) was up following incrementally positive company and peer commentary around a stabilisation and recovery in the key bioprocessing end market. Biotech and pharmaceutical customers stocked up on essential drug manufacturing components during the pandemic given concerns around supply chains, coupled with the essential nature of these drug therapies.These customers have spent the last year working through this excess inventory and commentary suggests this process is nearing an end, with a return to more normal growth expected during 2024. During November, Danaher got shareholder approval for its $6b acquisition of Abcam Plc, a leading manufacturer of essential antibodies used in drug research and development.

Alibaba (-9%) fell on weaker than expected earnings and the cancellation of the proposed spin-off of their cloud business. Its Gross Merchandise Volume modestly declined given a combination of a weak Chinese consumer market and ongoing competition from both live-streaming and low-cost ecommerce competitors. While margins continued to improve versus last year, the company plans to invest back into the core ecommerce business to support user engagement and price competitiveness, which could hamper further margin improvement near-term.