Sustainable Growth Advisers (SGA), an investment management company, released its fourth-quarter investor letter for its “Emerging Markets Growth Strategy.” A copy of the letter can be downloaded here. The fourth quarter of 2025 marked strong divergence from the market. Market leadership by AI beneficiaries and revival of cyclical sectors dominated the market, while quality growth strategies faced challenges. In Q4 2025, the portfolio returned 0.8% (Gross) and 0.6% (Net) compared to the MSCI EM Net TR Index return of 4.7% and the MSCI EM Growth Net TR Index return of 3.3%. In 2025, the portfolio delivered strong returns of 23.8% (Gross) and 22.8% (Net) but lagged the 33.6% and 34.3% returns for the indexes, respectively. The portfolio projects 13% revenue growth and 16% earnings growth annually for the next three years. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, SGA Emerging Markets Growth Strategy highlighted stocks like Alibaba Group Holding Limited (NYSE:BABA). Alibaba Group Holding Limited (NYSE:BABA) is a Chinese technology company that provides digital infrastructure and marketing reach. On February 11, 2026, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $164.32 per share. One-month return of Alibaba Group Holding Limited (NYSE:BABA) was -3.87%, and its shares are up 37.46% over the past twelve months. Alibaba Group Holding Limited (NYSE:BABA) has a market capitalization of $392.286 billion.
SGA Emerging Markets Growth Strategy stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2025 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. Management’s strategy to prioritize market share over unit economics in quick commerce will result in higher order volume and user engagement with an increasing share of gross merchandise value expected to drive better efficiency and unit economics improvement. The company’s quick-commerce segment has rapidly approached market leadership in daily food delivery, leveraging its vast Taobao user base and ecosystem assets such as Alipay and Amap, while also driving engagement and growth across core commerce. Ongoing investments in AI and cloud infrastructure are expected to increase in coming quarters, and AI demand is broad with many traditional industries and enterprises ramping adoption while cloud penetration in China remains low. We also expect ongoing investments in quick commerce and food delivery services to sustain market share and user engagement, although at a lower intensity compared to the initial investment stage. We remain confident in Alibaba’s ability to generate high-teens earnings growth over the next three years given its scale, innovation, and strong position in China’s digital economy. We added to the position during the quarter, maintaining an above-average weight.”
