As of 12-31-2017

Highlights

  • Market preferences favored large cap over small cap and among small cap stocks, growth over value
  • Strong value-oriented stocks contributed to performance while strong growth-oriented stocks detracted from performance
  • Fund ended quarter roughly sector neutral to benchmark with a value-over-growth bias

Looking back

The fourth quarter of this year was another good quarter for the domestic equity market (the Russell 3000 Index returned 6.34%). The market was changeable (just as in the third quarter), as market participants watched Congress and tried to anticipate which companies would be favored in the final tax bill. While the month of September had been strongest for small-cap value stocks, October was strongest for large-cap growth stocks. November was then neutral, style-wise—every one of the indexes inside of the Russell 3000 returned about 3%. In December, large cap was favored over small cap, and value was favored in the large caps and growth was favored in the small caps. At the end of the fourth quarter, all indexes in the Russell 3000 family were positive for the quarter, with the large-cap Russell Top 200 Growth Index leading with a return of 8.02%, and the small-cap Russell 2000 Value trailing at 2.05%.

Performance

Federated MDT Small Cap Core Fund R6 Shares returned 3.00% in the fourth quarter of 2017, underperforming the 3.34% return of its benchmark, the Russell 2000 Index.

Performance data 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.

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

Performance Contributors

  • Stocks with very high structural earnings, favorable cash flow and not-low analyst conviction
  • Security selection in Consumer Discretionary sector and underweighting the Real Estate sector
  • Relatively strong performers overweighted by the Fund: KB Home, Pinnacle Entertainment Inc, and Children’s Place, Inc.

Performance Detractors

  • Growth stocks with strong price trend and very high analyst conviction
  • Security selection in Industrials, Telecommunication Services and Consumer Staples sectors
  • Relatively weak performers overweighted by the Fund: Frontier Communications Corporation, OraSure Technologies, Inc. and GNC Holdings, Inc.

How We Are Positioned

The fund ended the fourth quarter roughly sector-neutral to the benchmark according to the Thomson Reuters I/B/E/S-based sector definitions used for the strategy. According to the GICS sectors, there was a significant overweight in Financials and smaller overweights in Consumer Discretionary and Information Technology. There was a significant underweight in Real Estate (the fund does not hold REITs) and a smaller underweight in Materials. Within the GICS sectors, there was a significant overweight position in the banks industry and smaller overweight positions in the retailing and semiconductors and semiconductor equipment industries. There was a significant underweight position in the real estate industry. At the end of the period, the fund was overweight value stocks relative to growth stocks.