Quarterly Commentaries

Global Equity Strategy 3Q 2018


Key Takeaways

  • In the third quarter of 2018, our Global Equity strategy delivered solid returns, but lagged the MSCI All Country World Index. The MSCI ACWI rose 4.28% in the quarter, pushing the benchmark back into positive territory for the first nine months. Year-to-date performance of our Global Equity strategy remains ahead of the benchmark.
  • Developed market equities proved to be more resilient than emerging markets, with the U.S. leading the pack by a wide margin. As the U.S. weight in the MSCI ACWI is just shy of 55%, the 7.71% return from U.S. stocks drove the majority of third quarter returns for the benchmark. Within the U.S., the information technology and health care sectors accounted for more than half of the returns.
  • A range of companies contributed to the strategy’s absolute returns, led by our U.S. holdings in the consumer discretionary and health care sectors in particular. At the other end of the spectrum, weakness came from our Indian financials that pulled back a bit after a long run-up, as liquidity concerns impacted that market.
  • Global GDP growth still has momentum. However, growth opportunities appear to be narrowing as U.S. interest rates climb, European rates look set to follow, the trade war between the U.S. and China escalates and energy prices rise. With the U.S. riding out the longest bull market in recent history, we expect some late-cycle challenges ahead. Meanwhile, the economic fortunes of European Union countries continue to diverge. And certain emerging markets remain under pressure with a sell-off in EM currencies. In this environment, we anticipate investors will continue to revisit forecasts and re-price risk.
  • The stability and relative predictability of earnings growth is a central property of quality growth companies. As a result, they are generally less sensitive to GDP growth than the broader market, as their earnings are driven by secular growth. This has historically helped protect investors in a downturn. We have sought to invest consistently in quality growth companies for more than 20 years, and do not plan to alter our approach. Our goal is to maintain a portfolio of companies with robust underlying earnings that can participate in a strong economy, but also offer fundamental protection during times of economic weakness.

Trailing Returns: Global Markets Equity Composite(As of 09.30.2018)

Calendar Year Returns

Source: NorthernTrust
All results portrayed are expressed in U.S. dollars. Periods under one year are not annualized.
Past performance is not necessarily indicative of future results. For full disclosure and for further information regarding comparison to an index, see the Disclaimer and Performance Disclosure.

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