As of 09-30-2018


  • Domestic equity investment returns exceeded the results on their benchmark for the quarter
  • An overweight to equity investments and underweight in fixed income contributed positively to results
  • End-of-quarter positioning continues to favor equity investments relative to fixed income with a modest tilt toward growth stocks over value.

Looking back

The third quarter opened with two strong months for the domestic equity market but finished with a less favorable month in September (the Russell 3000 Index returned 3.32%, 3.51% and 0.17% in the respective months for a total quarterly return of 7.12%). Large caps led the market: the mega-cap Russell Top 200 Index returned 8.38%, the Russell Midcap Index returned 5.00%, the small-cap Russell 2000 Index returned 3.58% and the Russell Microcap Index returned only 0.83%. The style results showed the Russell 3000 Growth Index returning 8.88% for the quarter, topping the Russell 3000 Value Index return of 5.39%. Last quarter, the Russell 3000 Growth Index had topped the Russell 3000 Value Index by even more but the entire growth advantage had been very narrow, driven by just the technology stocks in the mega-cap Russell Top 200 Index. This quarter, the advantage for growth stocks was broader and more consistent: growth led value by a similar amount in every one of Russell’s capitalization ranges.

A combination of solid economic growth and a Federal Reserve continuing on a path of gradual rate tightening contributed to an increase in U.S. Treasury rates and a moderate tightening in credit spreads during the quarter. As a result, fixed-income returns were muted as evidenced by the 0.02% result for the Bloomberg Barclays Capital U.S. Aggregate Bond (BBAB) Index. In this environment, Real Estate Investment Trusts (REITs) had a similarly moderate performance with the MSCI US REIT Index returning 1.09% over the period. Although strength in the dollar was not the headwind to relative international equity market performance that it had been in the first half of the year, international equity results again trailed those of domestic markets with the Morgan Stanley Capital International (MSCI) EAFE Index returning 1.35% in the quarter.


Federated MDT Balanced Fund Institutional Shares returned 4.68% in the third quarter, which moderately exceeded the 4.59% return for its benchmark, a 60%/40% blend of the S&P 500 Index and the 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

  • Domestic equity performance exceeded its benchmark with holdings in shares of companies in the Industrials, Information Technology, and Health Care sectors the most significant contributors
  • An overweight to equity investments and underweight in fixed income contributed positively to results over the quarter
  • Fixed-income performance exceeded its benchmark benefiting from relatively lower duration and an overweight to credit-sensitive instruments

Performance Detractors

  • Holdings in shares of companies in the Consumer Discretionary and Consumer Staples sectors made a negative contribution to results
  • International equity investments detracted from relative results as returns trailed those of the domestic market during the quarter

How We Are Positioned

As of the end of the period, domestic equities accounted for 56.4% of the portfolio and international equities 7.6%. Fixed income and cash investments represented 31.3% and 2.3%, respectively, while REITs accounted for 2.4%. Domestic equity investments are modestly more weighted toward growth stocks than value. Fixed-income investments are positioned with a slightly lower duration exposure relative to the benchmark.