As of 09-30-2017

Highlights

  • Market preferences shifted during the quarter from growth to value and large cap to small cap
  • Strong value-oriented stocks contributed to performance
  • Strong stock selection among stocks requiring external financing contributed to performance
  • Fund ended quarter roughly sector neutral to benchmark with a value-over-growth bias

Looking back

Just as in the second quarter of this year, the third quarter brought low positive returns (the Russell 3000 Index returned 4.57%) but a varying market environment. Large-cap stocks led small-cap stocks in the first two months of the quarter, but small caps did very well in September and ended the quarter just ahead of large caps (the small-cap Russell 2000 Index returned 5.67% during the quarter while the mega-cap Russell Top 200 Index returned 4.88%). On the style front, growth stocks outperformed value stocks in July and August, but value stocks offset part of the growth advantage in September (for the quarter, the Russell 3000 Growth Index returned 5.93% and the Russell 3000 Value Index returned 3.27%). 

Performance

Federated MDT Small Cap Core Fund Institutional Shares returned 6.84% in the third quarter of 2017, outperforming the 5.67% 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.

Performance Contributors

  • Stocks with high structural earnings and not significantly worsening earnings-to-price, and strong stock selection among stocks with high external financing needs
  • Security selection in Information Technology and Consumer Staples sectors
  • Strongest relative performers: Scientific Games Corporation, Kite Pharma, Inc. and Hertz Global Holdings, Inc.

Performance Detractors

  • Stocks with high structural earnings and depressed prices
  • Security selection in Consumer Discretionary sector
  • Weakest relative performers: PetMed Express, Inc. and iRobot Corporation.

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

Looking ahead

The fund ended the third quarter roughly sector-neutral to the benchmark according to the Thomson Reuters I/B/E/S-based sector definitions used for the strategy. According to the GICS sectors, there was a significant overweight in Financials and a smaller overweight in Consumer Discretionary. There was a significant underweight in Real Estate (the fund does not hold REITs) and smaller underweights in Materials and Health Care. Within the GICS sectors, there was a significant overweight position in the banks industry and smaller overweight positions in the retailing, consumer durables and apparel industries. There was a significant underweight position in the real estate industry and a smaller underweight position in the materials industry. At the end of the period, the fund was overweight value stocks relative to growth stocks.