U.S. Equity Strategy 3Q 2018


Key Takeaways

  • In the third quarter of 2018, our U.S. Equity strategy delivered strong returns, but modestly underperformed a robust market.
  • Every sector in the S&P 500 Index was positive, with health care and industrials generating double-digit returns. A strong U.S. economy, aided by the Trump tax cuts, has helped investors look past ongoing trade conflicts between the U.S. and China.
  • On a relative basis, our investments in the communication services sector and our lack of exposure to energy positively impacted performance. Our consumer staples and industrials holdings were the most significant detractors from relative returns. We continue to trim positions when stocks have performed well and their valuations are less attractive. We also remain selective and valuation-sensitive in contemplating new portfolio purchases.
  • While the Trump administration continues to take a hardline towards trade, especially with regard to China, the degree to which tariffs are applied is not likely to have a significant direct impact on our portfolio. We keep a close eye on volatile political issues such as this one; however, our primary emphasis is on corporate earnings growth. We avoid distraction from conflicting macro signals and focus on the bottom-up health of our portfolio companies.
  • While the strategy participated in a rising market, we believe it is equally important to provide a defense should there be a downturn. Quality growth companies, especially those that are less sensitive to GDP growth, should protect investors during times of economic difficulty, as has been the case historically. We have sought to invest patiently and consistently in quality growth companies for more than 20 years, and do not plan to alter our approach.

Trailing Returns: U.S. Equity Composite(As of 09.30.2018)

Calendar Year Returns

Source: NorthernTrust
All results portrayed are expressed in U.S. dollars.
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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