As of 12-31-2017

Highlights

  • Equity market performance exceeded that of fixed-income investments for the sixth consecutive quarter
  • Investments in shares of companies in the Industrials and Energy sectors made the most significant positive contribution to domestic equity relative performance
  • End of quarter positioning continues to favor equity investments relative to fixed income

Looking Back

The fourth quarter of this year was another good quarter for the domestic equity market with the Russell 3000 Index returning 6.34%. In terms of style, growth stock performance again exceeded that of value companies with the Russell 3000 Growth Index finishing the period up 7.61% as compared to the 5.08% result for the Russell 3000 Value Index. As has been the case throughout the year, the performance of the largest companies again surpassed that of smaller capitalization stocks as evidenced by the 6.79% return on the Russell Top 200 Index versus the 3.34% result for the Russell 2000 Index for the quarter.

A combination of factors including a federal funds target rate hike, passage of a tax-reform bill, improved economic results and well-contained inflation expectations led to a flattening of the U.S. Treasury curve as shorter-term rates increased while yields on longer-dated maturities changed only modestly. For the quarter, the Bloomberg Barclays Capital U.S. Aggregate Bond Index finished up just 0.39%. Real Estate Investment Trusts (REITs) had a similarly modest performance in light of their defensive characteristics and perception that these investments stood to benefit less from the tax changes than other sectors. The MSCI US REIT Index returned 1.47% over the period. International equity markets had another solid quarter, although results in developed markets trailed domestic returns as reflected in the 4.23% return on the Morgan Stanley Capital International (MSCI) EAFE Index.

Performance

Federated MDT Balanced Fund Institutional Shares returned 4.21% in the fourth quarter, which exceeded the 4.11% return for its benchmark, a 60%/40% blend of the S&P 500 Index and the Bloomberg Barclays Capital U.S. Aggregate Bond 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

  • Overall domestic equity performance exceeded its benchmark during the quarter, with holdings in shares of companies in the Industrials and Energy sectors the most significant positive contributors
  • An overweight position in equities helped relative performance as these investments performed better than fixed-income instruments
  • Fixed-income investments contributed positively to performance with returns that exceeded their benchmark

Performance Detractors

  • Holdings in shares of companies in the Information Technology and Utilities sectors had the most significant negative contribution to relative performance
  • The allocation to international equities detracted from overall results as these investments underperformed domestic equities during the quarter

How We Are Positioned

As of the end of the period, domestic equities accounted for 57.5% of the portfolio and international equities 8.1%. Fixed income and cash investments represented 29.3% and 3.1%, respectively, while REITs accounted for 2.0%. Domestic equity investments are evenly distributed between value and growth stocks. Fixed-income investments are positioned with a slightly lower duration exposure relative to the benchmark.