As of 06-30-2018

Highlights

  • Small-cap stocks outperformed large-cap stocks
  • Stocks with above-average structural earnings contributed to underperformance
  • Fund ended quarter roughly sector neutral to benchmark

Looking back

The second quarter began with small positive returns in April, improved significantly in May for all but large-cap value and finished weakly positive again in June as uncertainty concerning the developing trade dispute may have diminished the optimism of market participants. The Russell 3000 ended the quarter with a return of 3.89%, led by small-cap stocks (the small-cap Russell 2000 Index returned 7.75%, the mega-cap Russell Top 200 Index returned 3.86% and the Russell Midcap Index trailed at 2.82%). Small-cap stocks benefited as people saw that they had less exposure to international trade. While growth did lead value in the Russell 3000, almost all of that lead was attributed to technology stocks: Microsoft plus the FAANGs – Facebook, Amazon Apple, Netflix and Alphabet (Google) – were the top contributors to the Russell 3000 Index. To us, the narrow focus on the popular FAANG stocks and the relatively strong performance of small-cap stocks are confirming signs of investor worry over the brewing trade war.

Performance

Federated MDT All Cap Core Fund Institutional Shares returned 3.47% in the second quarter of 2018, underperforming the 3.89% return of its benchmark, the Russell 3000 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 on the Portfolio Characteristics tab for fund’s top 10 holdings.

Performance Contributors

  • Stocks with moderate analyst conviction but not high structural earnings
  • Security selection in Health Care sector
  • Relatively strong performers overweighted by the fund: Align Technology, Inc., ABIOMED, Inc. and ConocoPhillips

Performance Detractors

  • Stocks with above-average structural earnings and without notably worsening earnings-to-price
  • Security selection in Financials and Information Technology sectors
  • Relatively weak performers overweighted by the fund: Travelers Companies, Inc. and Lam Research Corporation
  • Relatively strong performer not held by the fund: Amazon.com, Inc.

How We Are Positioned

The fund ended the second 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 and commercial and professional services industries. There were underweight positions in the real estate and diversified financials industries. At the end of the period, the fund was tilted slightly toward value stocks.