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 Q3 2020 PSN SMA Top Guns Insights 

3Q 2020 PSN SMA Top Guns Winners Announced - The Great Recovery Rolls On

The stellar market recovery continued during the third quarter. The U.S. economy continued to stabilize, providing investors with optimism, resulting in equities (S&P 500 index) rising 8.93% during the quarter. Furthermore, the Federal Reserve (Fed) signaled that it will remain very accommodative in the years to come as expectations are for rates to remain near zero until 2023. However, equities fell late in the quarter due to a resurgence of coronavirus cases, while congress could not come to an agreement on an additional economic stimulus package.

The risk-on environment, largely driven by accommodative monetary policy and the Fed’s change to its inflation policy, boosted corporate bonds, while 10-year Treasury yields rose three basis points to 0.68% during the quarter.

U.S. Mid-Cap Growth Universe

Investor’s appetite for risk continued to grow in the third quarter as stabilizing economic data, business reopening's and upward revisions to forward corporate earnings forecasts supported the risk-on environment for U.S. equities. Despite tailwinds, a stalemate in Congress over a second economic recovery stimulus package thwarted investor optimism in September. Growth stocks (Russell 3000 Growth index +12.86%) continued to outperform value stocks (Russell 3000 Value index +5.42%) as consumer discretionary (S&P 500 Consumer Discretionary index +15.06%) and information technology (S&P 500 Information Technology index +11.95%) sectors provided the fuel for the growth style. Meanwhile, the energy sector (S&P 500 Energy index -19.72%) underperformed as exceptions for fuel consumption remained muted while the economy remains in recovery mode. Below are some of the strategies that make up the PSN Top Guns U.S. Equity Universe.


Orleans Capital           Anchor Capital           Zevenbergen Capital Investments

 

Emerging Markets Universe

The growing concerns about the potential for a second wave of coronavirus cases in the Eurozone hindered their economic recovery and equity performance.

Despite the headwinds, the EU provided a boost to equities (MSCI Europe ex. UK +5.98%) when they approved a €750 billion fund to help support member countries during the pandemic. Despite increasing tensions between the U.S and China, which included additional measures against Chinese companies, emerging market equities (MSCI Emerging Markets index) posted a solid 9.70% return during the quarter. U.S. dollar weakness supported the advance, while optimism towards a coronavirus vaccine and the ongoing economic recovery provided an additional boost. The following strategies made the PSN Top Guns list for the Emerging Markets Universe.

Caravan Capital           Morgan Stanley             Fiera Capital

 

High Yield Universe

The reopening of economies and loose monetary policies provided a risk-on environment for fixed income. The Fed continued to signal it will keep key, short-term benchmark interest rates lower for longer. Additionally, the Central Bank said it will change its inflation target to an average inflation target when determining its interest rate policy. This change in policy will allow inflation to overshoot the 2% bogey during periods of time before the Fed responds. Government yields were mixed around the globe as improved market and economic outlooks supported a three basis points (bps) increase in U.S. 10-year yields, while the U.K. 10-year rose six bps. Meanwhile, the EU’s €750 billion pandemic recovery fund helped improve sentiment for the region’s debt. The German 10-year yields fell seven bps, while Italy’s yield fell by 39 bps and Spain’s by 22 bps. Corporate bonds (Bloomberg Barclays U.S. Aggregate) posted a +0.62% return, while going down the fixed income risk spectrum benefited investors as high yield bonds posted a 4.71% return (ICE BofA US High Yield Master II index). Below are some of the strategies that make up the PSN Top Guns High Yield Universe.


L&S Advisors           DDJ Capital Management            Ivy Investments 

 

New SMA Top Guns Model Portfolios

In case you missed it last quarter, we released new, separately managed account (SMA) model portfolios using our industry-recognized PSN Top Guns to show you practical applications of the award-winning strategies and potential results. We have updated the models to incorporate Q3 2020 results. Read more about our new Top Guns Model Portfolios on our blog post here.

Download Top Guns Model Portfolios

The complete list of PSN Top Guns and an overview of the methodology can be located here. If you do not have a login, you may register for complimentary access. For more details on the methodology behind the PSN Top Guns Rankings, or to purchase PSN Top Guns Reports, contact Margaret Tobiasen.

 

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