We think recent volatility is certainly understandable given the unknown scale and longevity of the coronavirus pandemic. However, while times like these are challenging for investors, we also believe they can help sharpen conviction in underlying investments, especially those that should sustainably emerge from this period.

Information Technology

Disruptive business models and technologies within the sector continue to present compelling investment opportunities. Secular demand for public cloud computing services continues to be a growth driver in the segment. We also continue to favor companies driven by the convergence of communications and computing, including internet software companies, and those that will benefit from broad global tailwinds in digital payments.

• Shares of Synopsys, a leading electronic design automation (EDA) company, finished lower but outperformed the broader market. The resilient fundamentals of Synopsys and other EDA names proved attractive to investors in search of stability amid broader equity-market volatility. We bought shares as we believe that the company is poised to reap the benefits of scale as EDA becomes an increasingly vital component of the semiconductor industry. We are also drawn to the company's attractive risk/reward profile.
• We reduced our position in financial and human resources management (HRM) software company Workday in favor of other names with clearer near-term upside potential. Workday's widely used HRM software is showing signs of slowing growth and the adoption rate of its smaller financial management software business has lagged.

Consumer Discretionary

We have a sizable position in the consumer discretionary sector and are constructive on stock-specific opportunities within the sector. We are focused on businesses benefiting from the secular shift of consumer spending to online retail, as well as companies positioned to take advantage of the long-term growth in online travel services.

• A sharp drop in travel demand to Macau and Las Vegas weighed significantly on shares of Wynn Resorts during the quarter. We added shares opportunistically as we feel the hotel and casino operator boasts a healthy balance sheet with ample liquidity and, in our opinion, is well positioned to benefit from a cyclical rebound in Macau once travel to the region resumes.
• Restaurant Brands International is a multinational fast food holding company. Prior to the market downturn, we sold shares of the firm as we felt the company's competitive positioning was deteriorating. We redeployed the proceeds to fund more compelling opportunities within the restaurant industry.

Health Care

We remain focused on finding opportunities in the health care sector that can take advantage of lasting trends, such as managed care industry consolidation, innovations in medical equipment, and robotic technology. In therapeutics, our emphasis is on select companies that have strong fundamentals and the potential to bring additional new drugs to market in areas with large, unmet clinical needs.

• Despite solid fundamentals, shares of Cigna underperformed due to concerns that the coronavirus outbreak would elevate its expenses. We added shares opportunistically as we think any potential cost increases will be at least partially offset by patients postponing elective procedures.
• Becton, Dickinson & Company is the largest manufacturer of single-use medical needles, syringes, and blood collection devices. Shares fell on news that the company issued a voluntary recall of its Alaris infusion pumps. As a result, we trimmed our position in favor of other investment opportunities.