As of 12-31-2017

Highlights

  • Market preferences shifted during the quarter from growth to value
  • The most strongly value-oriented stocks contributed to performance

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 fourth 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 Large Cap Value Fund R6 Shares returned 6.22% in the fourth quarter of 2017, outperforming the 5.33% 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.

Performance Contributors

  • Strong value stocks with high tangible book-to-price, high structural earnings and favorable cash flow
  • Security selection in Industrials, Energy and Consumer Discretionary sectors
  • Relatively strong performers overweighted by the Fund: Valero Energy Corporation, Deere & Company and J.M. Smucker Company
  • Relatively weak performer not held by the Fund: General Electric Company

Performance Detractors

  • Stocks with less strong value or growth characteristics, such as those with low analyst conviction, low cash flow but high structural earnings
  • Security selection in Health Care and Utilities sectors
  • Relatively weak performer overweighted by the Fund: PG&E Corporation
  • Relatively strong performers not held by the Fund: Wal-Mart Stores, Inc. and Berkshire Hathaway Inc.

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

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, except for an underweight in Financial Services where the strategy does not invest in REITs. According to the GICS sectors, there was a small overweight in Health Care and underweights in Real Estate and Industrials. Within the GICS sectors, there were small overweight positions in the technology hardware and equipment, retailing and banks industries. There were significant underweight positions in the real estate and diversified financials industries.