Over the quarter, our positioning remained largely sector neutral. We are currently in a very challenging environment where markets are debating the timing of the end to the pandemic and what the world will look like in the next six to 12 months. This is creating more complexity for us as investors, and with so many unknowns, our most pressing goal is to keep a very balanced portfolio of diverse holdings across sectors and regions. As always, we want to own truly innovative companies that can produce solid growth over a two- to three-year time horizon, while paying a reasonable price. With the market flip-flopping between favoring secular and cyclical companies, we are being diligent about using the opportunities presented to pick up names we like at reasonable valuations.

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Sector-wise, our most meaningful overweight is in consumer discretionary, with other sectors having much more modest over- and underweights versus the benchmark. Consumer discretionary was also the sector that had the most meaningful shift, as our allocation increased. Meanwhile, our exposure to consumer staples and industrials and business services decreased. Regionally, our allocation to North America decreased, while other regions experienced more modest shifts. We continue to be overweight fast-growing emerging market countries that have low debt-to-gross domestic product ratios and attractive demographic growth, such as India, Indonesia, Vietnam, and the Philippines. The portfolio is also overweight China, with an emphasis on domestic exposure to areas like information technology and health care, where there is a lot of innovation and the government is focused on building vibrant domestic industries.

Consumer Discretionary

The consumer discretionary sector now represents our largest overweight position. In our view, there are more coronavirus beneficiaries in the consumer discretionary sector than anywhere else, but this has led to a dramatic demarcation between winners and losers. COVID-19 has pulled forward years of e-commerce share gains in the span of a few months, and we have an expanded and diverse set of names levered to that trend. We continue to think the market is severely underestimating the profound effect the pandemic has had on the consumer landscape. It is now vital for companies to view their businesses through an omnichannel lens, and it is no longer an option for businesses to ignore the need for an online presence.

• Pinduoduo is a rising e-commerce leader with the largest number of online buyers in China. The stock was significantly down from its February highs due to skepticism around the company's foray into community grocery. We think Pinduoduo can be the potential winner in community grocery, a key innovation in e-commerce, which we view as a large opportunity set where long-term profitability is feasible.

Energy

While oil prices have rebounded and there is better balance between supply and demand in the short term, we continue to have a subdued medium- and long-term outlook on the sector due to still rampant U.S. shale productivity, less impetus for coordination between oil-producing nations, and growing ESG/terminal value concerns. We currently have no exposure to the energy sector.

• We exited our position in European integrated oil and gas producer Galp Energia. Our thesis for the company has changed, as the company tilts toward more downstream energy sources where we feel it has less of a competitive advantage. With our conviction reduced, we chose to move on from the stock.

Health Care

The long-term secular tailwinds for the health care sector remain in place. Within the sector, we have meaningful exposure to life sciences tools and services companies making biologics or facilitating research and development efforts for companies in the biopharma space, as well as equipment and supplies companies focused on medical diagnostics and testing. We also own companies tied to the ongoing secular trend of robotic surgery and have exposure to U.S. managed care where fundamentals remain strong and valuations are attractive. Within biotechnology, we continue to seek to�invest in highly innovative companies that have the best chance of dominating their space through drugs likely to become the standard of care in large and well-characterized markets or companies where we have a degree of confidence that the repeatability of their platform gives them the potential to become much larger over time.

• We eliminated our stake in leading contract research organization PPD following news that the company would be acquired by Thermo Fisher Scientific. We used the sale proceeds to buy shares of other names within the health care space that we believe offer more attractive risk/reward potential.

Information Technology

Advancements in areas like artificial intelligence (AI) and enterprise software are not only affecting technology companies, but also reshaping more traditional industries once viewed as less susceptible to business model disruption. The powerful long-run trends that we believe will drive value creation in the technology sector remain and, in some cases, have been accelerated by the ongoing pandemic. Aftereffects from the pandemic could also result in lasting behavioral changes with more people working remotely and payment methods skewing more digitally. As a result, software and electronic payments are areas of focus for our sector exposure, but we also remain positioned to benefit from increasing AI adoption as well as the growing technology consumption in emerging markets.

• We initiated a position in Chinese construction software vendor Glodon. Glodon's main source of revenue is from its contribution cost estimation software, where it has a dominant market position and a meaningful competitive advantage. We think there are several tailwinds for Glodon that should lead to strong growth over the long term, including the company's efforts to transition to a subscription-based venue model as well as cross-selling opportunities that should fuel growth in its newer business segments of construction management and design software.
• We started a position in Manhattan Associates, which develops warehouse and supply chain�execution software primarily used by retail and retail-related customers, third-party logistics,�life sciences, and�high-tech industries.�The company has a synergistic portfolio of cloud products that is well positioned to benefit from ongoing omnichannel retail and direct-to-customer trends. We think the company's cloud revenue can grow substantially as its customer base invests in upgrading systems to stay relevant and meet their customer expectations.