Quarterly Commentaries

U.S. Equity Strategy 3Q 2017

10.19.2017

Key Takeaways

 
  • In the third quarter of 2017, our U.S. Equity Strategy delivered positive returns, but underperformed the strong performance of the S&P 500 Index – consistent with our quality growth investment style.
  • The U.S. economy continued to expand steadily. Concerns over the debt ceiling were abated as a deal was reached. Importantly, underlying fundamentals remain solid with a healthy second quarter corporate earnings season. Within the economy there continues to be strong shifts, as business models, such as those impacted by new technology, and new regulatory frameworks evolve. Amazon continues its steamroller growth and has created some interesting opportunities in its wake as investors flee.
  • Our U.S. Equity Strategy’s absolute returns were driven primarily by our holdings in the Information Technology and Financials sectors. However, in market relative terms, our Consumer Staples and Consumer Discretionary stocks underperformed.
  • 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.

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