Quarterly Commentaries

Global Equity Strategy 3Q 2017


Key Takeaways

  • In the third quarter of 2017, our Global Equity Strategy delivered solid returns, but underperformed the strong performance of the MSCI All Country World Index – consistent with our quality growth investment style.
  • Across the globe, almost all equity markets registered positive returns for the quarter. The broad macro backdrop is reasonably steady with wage growth, inflation, household leverage and housing markets at reasonable levels in most major economies, supported by low interest rates and energy prices. This stable backdrop is certainly good enough for companies with structural growth drivers to continue growing earnings and adding value for shareholders.
  • Absolute returns in the quarter were driven primarily by our holdings in the Information Technology sector and Indian Financials. However, in market relative terms, performance was held back by our Consumer Staples and Consumer Discretionary holdings.
  • The U.S. remains our largest country exposure. We feel valuations have pushed towards the high end of historic ranges in part due to earnings growth coming through – but also low interest rates diverting funds away from bonds. We anticipate the Fed will gradually raise rates to allow markets to adjust. We continue to find quality businesses we feel are undervalued, even assuming some pullback in valuation multiples.
  • Consumer Staples remains our largest sector exposure, even after trimming over the past 12 months. We continue to remain comfortable with the predictability and stability of growth we find in the leading franchises, which, complemented with strong cash flow, continue to provide a deep keel to our portfolio.

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