As of 03-31-2018


  • Both equity and fixed-income markets returned modestly negative results for the quarter
  • Domestic equity performance significantly outperformed its benchmark during the period led by investments in the Information Technology, Consumer Staples and Financials sectors
  • End of quarter positioning continues to favor equity investments relative to fixed income

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 the 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 declined by 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%).

Fixed-income markets were not immune to the increase in volatility during the quarter with rates increasing and the curve steepening early in the period on growth optimism following the passage of tax reform, only to reverse course later due to concerns about trade issues. For the quarter, Treasury rates finished higher across the curve and credit spreads widened modestly, resulting in a disappointing -1.46% return for the Bloomberg Barclays Capital U.S. Aggregate Bond Index. Real Estate Investment Trusts (REITs) also had a poor result as the group had little direct benefit from tax reform and saw funds flow away from the space as rate expectations increased. For the period, the MSCI US REIT Index returned -8.05%. International equity market performance finished the quarter slightly behind the domestic market with the Morgan Stanley Capital International (MSCI) EAFE Index returning -1.70%.


Federated MDT Balanced Fund (Institutional Shares) returned 1.07% in the first quarter, which exceeded the -0.97% 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 Information Technology, Consumer Staples and Financials sectors the most significant positive contributors
  • Relative returns for fixed-income and REIT investments modestly helped relative results as these investments outperformed their benchmarks
  • An overweight to equity investments and underweight in fixed income was a small positive contributor

Performance Detractors

  • Holdings in shares of companies in the Utilities sector made a small negative contribution to results
  • Positioning for a flattening yield curve and an overweight position in investment-grade credit made negative contributions within the fixed income portfolio.

How We Are Positioned

As of the end of the period, domestic equities accounted for 61% of the portfolio and international equities 8.8%. Fixed-income and cash investments represented 27.6% and 1%, respectively, while REITs accounted for 1.6%. Domestic equity investments are more heavily weighted toward growth stocks than value. Fixed-income investments are positioned with a slightly lower duration exposure relative to the benchmark.