As of 03-31-2018

Highlights

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

Looking back

The first quarter of this year started strong as the year-to-date return of the Russell 3000 Index peaked at 7.11% on Jan. 26, but that entire gain had vanished by mid-February. Each tentative rally thereafter was reversed and the Russell 3000 Index ended the quarter with a net loss of ‑0.64%. Growth-oriented stocks led in the first two months and value stocks led in the last month, just as they had during the quarter ended in December 2017. At the end of the quarter, growth stocks were still substantially ahead of value stocks (Russell 3000 Growth at 1.48%, Russell 3000 Value at -2.82%, with similar spreads in all the capitalization ranges). While there were differences between the capitalization ranges during the quarter (large cap started strong and small cap ended strong), those differences netted out to nothing at the end of the quarter (the small cap Russell 2000 Index returned ‑0.08%, while the mega-cap Russell Top 200 Index returned ‑0.78%).

Performance

Federated MDT Large Cap Value Fund R6 Shares returned ‑0.63% in the first quarter of 2018, outperforming the ‑2.83% 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

  • Strong value stocks with high tangible book to price, high structural earnings and favorable cash flow
  • Stocks with high structural earnings and cash flow that was not low
  • Security selection in Financials, Consumer Discretionary and Health Care sectors
  • Relatively strong performers overweighted by the fund: PNC Financial Services Group, Inc., Dillard’s, Inc. and Kohl’s Corporation
  • Relatively weak performers not held by the fund: Wells Fargo & Company and General Electric Company

Performance Detractors

  • Stocks with very high tangible book to price, price near high and positive analyst conviction
  • No sectors were significant detractors
  • Relatively weak performers overweighted by the fund: Prudential Financial, Inc. and Principal Financial Group, Inc.
  • Relatively strong performer not held by the fund: Cisco Systems, Inc.

How We Are Positioned

The fund ended the first 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 insurance, technology hardware & equipment and retailing industries. There were significant underweight positions in the real estate and diversified financials industries.