We continue to favor many of our high-conviction holdings in the information technology and consumer discretionary sectors, where valuations still look relatively compelling given the trajectories of the underlying businesses.

Information Technology

Within the information technology sector, we focus on innovative business models that can take advantage of transformational change. We favor companies with durable businesses that address large and growing markets, including electronic payment processing and public cloud computing services.

• NVIDIA is the leading designer of graphics processing units in its industry. We bought shares during the quarter as we believe NVIDIA is a high-quality company with increasing leverage to several up-and-coming secular growth markets, including artificial intelligence, supercomputing, and autonomous driving.
• We pared our position in VMware after management delivered disappointing guidance, primarily due to an increasingly uncertain information technology spending environment. The company announced acquisitions of Pivotal, a container technology firm, and Carbon Black, an endpoint security provider, contributed to the uncertainty and raised questions about the health of VMware's core business. We sold shares to moderate our positions size; however, over the long term, we expect VMware to gain market share as its new products become more widely adopted within its installed base.

Consumer Discretionary

We remain optimistic about stock-specific opportunities within the consumer discretionary sector. We favor businesses benefiting from the secular shift of consumer spending to online products and services. We believe industries such as physical retail and traditional media are secularly challenged; therefore, we plan to continue emphasizing companies within the sector that we think are on the right side of change and disruption.

• We added shares of Alibaba Group Holding during the quarter. While trade tensions are a near-term overhang on the stock, we remain constructive on the long-term fundamentals and expect the Chinese internet giant's investments in its cloud business and offline retail to pay off by expanding the company's total addressable market. Moreover, the company's rich data on user behavior across its different services also create ample opportunity for monetization, while its leadership in online retail offers exposure to rising household incomes in China and other emerging markets.
• We trimmed the portfolio's position in Marriott as fears of a global economic slowdown suppressed the returns of several hotel and leisure brands. Overall, we continue to like Marriott as it is the largest operator in an industry where scale is beneficial and long-term secular tailwinds exist.

Health Care

Our allocation to the health care sector is composed of select therapeutics and medical device companies that we believe have limited exposure to potential regulatory pressures. We are also emphasizing managed care companies positioned to benefit from industry consolidation as well as the increasing focus on providing cost-effective solutions.

• We added to our position in Vertex Pharmaceuticals. In our view, the commercial-stage biotech company remains well positioned to sustain and expand its dominant leadership position in cystic fibrosis and is working on a number of other combinations that offer either improved efficacy over current treatments or applicability to a wider cross-section of cystic fibrosis patients.
• Shares of UnitedHealth Group continued to fall due in large part to the political climate surrounding a proposed "Medicare for All" plan. We sold shares during the quarter to reduce our position size; however, we continue to like UnitedHealth Group as we think it is well diversified and should see accelerated earnings growth as a result of improving Medicare performance and continued growth in its Medicaid business. Furthermore, we feel a single-payer health care system is extremely unlikely, but we also recognize the meaningful shift in sentiment around stocks in the managed care industry, as well as the reality that political rhetoric is only likely to intensify as the 2020 U.S. presidential election approaches.