Quarterly Commentaries

Global Equity Strategy 4Q 2017


Key Takeaways

  • Our Global Equity Strategy outperformed the MSCI All Country World Index in the fourth quarter and the one-year period ending December 31, 2017.
  • Macroeconomic conditions and earnings growth across the world’s major economies were strong and consistent this year. In the fourth quarter, performance was positive across all major markets. The two largest sectors, Information Technology (IT) and Financials, were the biggest contributors to benchmark returns in both the fourth quarter and the full year.
  • U.S.-based companies account for approximately 50% of our Global Equity Strategy. These holdings made the most significant contribution to fourth quarter (and full year) returns. Our holdings in the Consumer Discretionary and Health Care sectors, with strong performances by Nike, Paddy Power and UnitedHealth Group, were the biggest drivers of relative returns in the fourth quarter. Our Consumer Staples companies weighed against relative performance, despite generating a solid positive contribution in both the fourth quarter and the full year.
  • While the global expansion is likely to remain intact in 2018, the near-perfect macro backdrop could deteriorate due to changes in monetary policy by central banks in the U.S., Europe and perhaps Japan, or other factors. As central banks become less accommodative, market volatility could rise. Escalating geopolitical tensions represent potential risks that could also shake up markets.
  • The key to our approach is determining the sustainability of a potential investment’s competitive advantage, the predictability of its growth, and if it can be purchased at a sensible price. We continue to believe that our portfolio represents a high-quality selection of companies that can navigate through even weak economic conditions.

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