U.S. Equity Strategy 1Q 2019


Key Takeaways

  • After a treacherous fourth quarter, U.S. equity markets had a strong start to the year, bolstered by the Fed’s pause in interest rate increases and improving sentiment on U.S.-China trade tensions. In the first quarter of 2019, our U.S. Equity strategy captured a significant portion of the market’s upside, yet underperformed the S&P 500 benchmark, which advanced 13.65%. Nine of the Index’s eleven sectors posted double-digit returns.
  • Our holdings in the financials and consumer staples sectors detracted from our relative performance. However, our holdings in the consumer discretionary sector positively impacted relative returns, as did our lack of exposure to utilities.
  • At times, the market focuses on a single variable. Over the last few months, that variable has been the Fed’s intentions. Yet a host of other significant risks remain from political headwinds to structural risks lingering below the surface. Rising populism in many countries is posing risks to the global trade regime, which in turn has implications for some companies’ profit margins. And corporate debt requires even more scrutiny at the latter stages of a business cycle.
  • As quality growth investors, we differentiate between growth driven by secular and cyclical forces in our portfolio companies. Even if the cycle turns down, we see opportunities for structural growth to drive earnings at many of our holdings. If we get the structural growth story correct, that should help with downside protection. In tough economic times, this protection is a hallmark of our investment style and a compass for portfolio construction.

Trailing Returns: U.S. Equity Composite(As of 03.31.2019)

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.