Quarterly Commentaries

Global Equity Strategy 1Q 2018


Key Takeaways

  • In the first quarter, the MSCI ACWI returned a mild –0.96%, masking a volatile period with performance ranging from a high of 7.32% to a low of -2.32%. The Vontobel Global Equity strategy return of -0.74% slightly outperformed the market. Over the past 12 months, the 17.00% return from the portfolio is ahead of the benchmark by 2.15%.
  • Information technology and consumer discretionary were the only two of the eleven benchmark sectors up in the quarter. The strategy is overweight these sectors, and partly why these sectors were the largest contributors to both absolute and relative returns. Consumer staples underperformed in the Index as the market rotated away from stable and higher dividend yield areas. Due to our overweight in staples, this sector weighed on absolute and relative returns.
  • Economies around the world look strong on the surface with relatively synchronized growth over the past decade. However as growth compounded, certain imbalances appear set to unwind that we believe should create rising uncertainty and increased differentiation of fundamentals by the markets:
    • Rising inflation - leading rates up in the U.S. and likely to spread to Europe, Japan and some emerging markets.
    • Oil prices rose sharply over 12 months, lifting oil export markets, but the impact on consumers has not registered.
    • U.S.-China trade conflict adds considerable uncertainty for Chinese manufacturers and supply chain.
    • Nationalism and anti-globalization reflected in politics in many countries
  • The U.S. economy has grown well for almost a decade, is heating up as unemployment reaches cyclical lows and the government just passed a tax cut and a massive increase in budgeted spending. We believe inflation will continue to lift rates for the foreseeable future.
  • The negotiations to rebalance trade flows between China and the U.S. have introduced uncertainty for companies with export operations in China. We have little direct exposure to this risk within the portfolio. We think both sides realize a pragmatic deal is the best outcome - but change brings unpredictability.

Trailing Returns: Global Markets Equity Composite(As of 03.31.2018)

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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