Consumer discretionary stocks are being lifted by the consumption habits of both 80 million millennials at one end of the age spectrum and 70 million baby boomers at the other, she says. The former group, many burdened by student loans and other debt, often prize value over luxury. When they do pamper themselves, it is likely to be with small purchases such as $5 coffees at Starbucks (a fund holding). E-commerce websites, such as Amazon and Expedia, fulfill the growing appetite for online shopping among both younger and older consumers. 

Estée Lauder, one of the fund’s top performers in the first quarter of this year, has been successful in leveraging its old-school brand into names such as Clinique, which appeals to a younger audience. At one time, Hirsch says, Estée Lauder was a family-run business with poor management but a steady-eddy fan base for its line of cosmetics. But under the guidance of Fabrizio Freda, who became president and CEO in 2009, the company has spiffed up its image and increased its use of social media to reach a younger clientele. It has also broadened its product line through acquisitions of luxury brands such as GLAMGLOW, which specializes in facial masks and has a strong foothold both online and in high-end department stores. The company has also increased its consumer reach through the acquisitions of several luxury perfume brands. 

Other consumer discretionary holdings in the growth fund include Mattel, whose products include Barbie and American Girl dolls. Hirsch believes Mattel should benefit from an uptick in birth rates in the U.S. In the financials sector, the increasing use of credit cards in emerging markets provides a tailwind for fund holdings MasterCard and Visa.

Over the last year, health-care stocks have been plagued by uncertainty over political campaign rhetoric and by the cautionary tale of Valeant Pharmaceuticals International. Once a high-flying growth stock, the company took a hit last summer following government investigations into its pricing and distribution practices. By late April of this year, its shares were trading at about 80% below their August 2015 high. 

A widespread perception that valuations on biotechnology stocks had reached their limit made matters worse. As a result of all these factors, many biotechnology stocks are selling 30% or more below their 52-week highs. Hirsch believes that the market is failing to distinguish between innovators and companies subject to negative regulatory oversight, such as Valeant. 

One such innovator, fund holding Celgene, is best-known for its blockbuster blood-cancer-fighting drug Revlimid. The stock slid in the first quarter along with those of most biotech companies amid the increasing publicity about high drug costs and possible government efforts to rein them in. Since then, the stocks’ recovery has been slow, and Celgene still trades at a below-market multiple. 

Hirsch says that despite investor pessimism, the company provided guidance of 20% growth through 2020, driven by a strong pipeline that should offset the expiration of certain patents in coming years. That pipeline includes new drugs to treat blood cancer, as well as ulcerative colitis and Crohn’s disease. Celgene has also made a number of strategic acquisitions in recent years and has numerous partnerships and collaboration deals across the industry. 

In the technology area, the company owns Alphabet, the parent fund of Google (after the latter’s 2015 reorganization) and also now the parent of several other companies that Google once owned in industries such as technology and life sciences. Hirsch says Alphabet’s CFO, Ruth Porat, is providing more information about what’s going on at the company between quarterly earnings reports than Alphabet revealed in the past. Hirsch also notes that Google’s core search business continues to report strong top-line revenue growth. 

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