As of 09-30-2018

Highlights

  • The market favored large-cap stocks over small-cap stocks and growth over value
  • Small-cap growth stocks with very high analyst conviction and strong technical factors contributed to performance
  • Fund ended quarter roughly sector neutral to benchmark except for its Real Estate underweight

Looking back

The third quarter of this year opened with two strong months for the domestic equity market but finished with a less favorable month in September (the Russell 3000 Index returned 3.32%, 3.51% and 0.17% in their respective months for a total quarterly return of 7.12%). Large caps led the market: the mega-cap Russell Top 200 Index returned 8.38%, the Russell Midcap Index returned 5.00%, the small-cap Russell 2000 Index returned 3.58% and the Russell Microcap Index returned only 0.83%. The style results showed the Russell 3000 Growth Index returning 8.88% for the quarter, topping the Russell 3000 Value Index return of 5.39%. Last quarter, the Russell 3000 Growth Index had topped the Russell 3000 Value Index by even more but the entire growth advantage had been very narrow, driven by just the technology stocks in the mega-cap Russell Top 200 Index. This quarter, the advantage for growth stocks was broader and more consistent: growth led value by a similar amount in every one of Russell’s capitalization ranges.

Performance

Federated MDT Small Cap Core Fund Institutional Shares returned 5.38% in the third quarter of 2018, outperforming the 3.58% 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

  • Growth stocks with very high analyst conviction and strong technical factors
  • Security selection in Information Technology and Health Care sectors
  • Relatively strong performers overweighted by the fund: Medifast, Inc., Molina Healthcare, Inc., SeaWorld Entertainment, Inc. and Inogen, Inc.

Performance Detractors

  • Stocks with neutral to high analyst conviction and flat or improving earnings-to-price
  • Security selection in Consumer Discretionary and Financials sectors
  • Relatively weak performers overweighted by the und: TRI Pointe Group Inc. and Shutterfly, Inc.

How We Are Positioned

The fund ended the third quarter roughly sector-neutral to the benchmark according to the GICS sectors, except for an underweight in Real Estate (the fund does not hold REITs). Within the sectors, there were overweight positions in the banks and software and services industries. There was a significant underweight position in the real estate industry and a smaller underweight position in the capital goods industry. At the end of the period, the fund was tilted toward growth stocks.