As of 06-30-2017


  • The U.S. equity markets continued to favor growth-oriented sectors.
  • The U.S. Federal Reserve (Fed) saw enough positive economic data to continue with its tightening policy.
  • Stock selection was the primary contributor to performance.

Looking Back

During the second quarter of 2017, the U.S. economy continued its tepid but steady pace of growth. Unemployment dropping to 4.3% in May, the lowest level since 2001, and the ISM survey of manufacturers, while slowing from the first quarter, remained in expansionary mode. The Fed persisted in its tightening policy as economic data supported such a move.  Broadly, global equity markets were positive throughout the quarter.  The U.S. equity markets were led by the S&P 500 Index, up 3.09% during the quarter, followed by large-cap stocks represented by the Russell 1000 Index, up 3.06% for the period, followed by mid-cap stocks represented by the Russell Mid-Cap Index, up 2.70%, followed by small-cap stocks, up 2.46%, represented by the Russell 2000 Index.  Large-cap growth stocks also outperformed large-cap value stocks, continuing the trend from the first quarter of the year.

During the second quarter, the portfolio team added the following positions: Galapagos NV, ServiceNow and Align Technology, Inc. Also during the quarter, the portfolio subtracted the following positions in pursuit of better opportunities:  NXP Semiconductors, Tenaris SA, Tractor Supply and Acuity Brands.


Federated Kaufmann Large Cap Fund Institutional Shares returned 5.40% at NAV for the three months ended June 30, 2017. That compares with its benchmark Russell 1000 Growth Index, which returned 4.67% during the same period.

Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. Other share classes may have experienced different returns than the share class presented. To view performance current to the most recent month-end and for after-tax returns, click on the Performance tab.

Click the Performance tab for standard fund performance.

Performance Contributors

  • Stocks that made a positive contribution to performance included Alibaba Group, Zoetis Inc., Edward Life Sciences, Osram Licht Ag and Veeva Systems.

Click on the Portfolio Characteristics tab for the fund’s top 10 holdings.

Performance Detractors

  • Stocks that detracted from performance included Pioneer Natural Resources, T-Mobile, TJX Company Inc., Galapagos and Tenaris.

Looking Ahead

Based on various economic surveys, many managers of U.S. companies continue to be encouraged by the economic agenda set forth by the new presidential administration. Despite only minor progress being made by the administration since February, the prospect that the tax and regulatory burden on companies may not get worse is a positive sign in itself to many domestic companies. While growth equities, specifically secular earnings growth companies, helped drive the equity market higher in 2017, after a five-quarter lull in earnings growth, this momentum may need policy assistance to maintain and broaden out to other sectors.

This quarter the fund had approximately 77% of the portfolio invested in four sectors: Information Technology, Health Care, Consumer Discretionary and Industrials.  The portfolio’s sector weightings are a byproduct of our bottom-up stock selection strategy with a team of sector-specialist portfolio managers.   We seek to find companies that have company-specific catalysts for growth rather than develop macro themes to construct sector weightings.  These sectors also have historically provided good opportunities for bottom-up growth investors.