As of 09-30-2018

Highlights

  • Large-cap growth stocks outperformed large-cap value stocks
  • 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 Large Cap Value Fund Institutional Shares returned 5.96% in the third quarter of 2018, outperforming the 5.70% return of its benchmark, the Russell 1000 Value 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 analyst conviction that was not low and prices not near 52-week highs
  • Security selection in Consumer Staples and Energy sectors
  • Sector selection in underweighting the Real Estate sector
  • Relatively strong performers overweighted by the fund: T-Mobile US Inc., Eli Lilly and Company and Royal Caribbean Cruises Ltd.

Performance Detractors

  • Stocks with a combination of strong growth, value and quality characteristics
  • Security selection in Information Technology sector
  • Relatively weak performer overweighted by the fund: Newmont Mining Corporation
  • Relatively strong performer underweighted by the fund: Berkshire Hathaway Inc. (Class B)
  • Relatively strong performer not held by the fund: Cisco Systems, 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 was a significant overweight position in the insurance industry. There were underweight positions in the real estate, diversified financials and media industries.