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Q4 2017 PSN Top Guns - The Bull Keeps Raging

The equity bull market raged on through the fourth quarter of 2017, nearing the longest bull market in history. Improving corporate earnings and the passing of President Trump’s tax reform bill, provided a boost to U.S. equities during the quarter (Russell 3000 index +6.34%). U.S. investment grade fixed income experienced modest gains (Bloomberg Barclays U.S. Aggregate index +0.39%), as the U.S. Federal Reserve (Fed) was active during the quarter. The Fed started the process of unwinding their ballooning balance sheet, as well as increasing interest rates by 25 basis points, which was widely expected.

Generally positive U.S. economic data provided tailwinds for domestic equities, as investors were rewarded by climbing up the size spectrum and investing in large caps. Large caps, measured by the Russell 1000 index (+6.59%), outpaced small caps, represented by the Russell 2000 index (+3.34%), by over three percentage points. In terms of style, growth stocks continued their 2017 dominance over value stocks. Below are some of the strategies that make up the PSN Top Guns Large Cap Universe.

  • Conning, Inc.: High Dividend Equity (+16.8% for the quarter)
  • Hixon Zuercher Capital Management: Focused Equity Income Portfolio (+11.2% for the quarter)
  • New Amsterdam Partners: Large Cap Quality Growth Active (+11.0% for the quarter)

 

Emerging markets, represented by the MSCI Emerging Markets index, continued its torrid pace, with a +7.50% return for the quarter. Supporting the strong gains were political developments, improving global economic data, and strengthening commodity prices. Emerging Asian regions were an important catalyst for the gains, as the MSCI Emerging Markets Asia index rose 8.41% during the quarter. The following strategies made the PSN Top Guns list for the Emerging Markets Universe.

  • Columbia Management Investments: India Consumer (+17.8% for the quarter)
  • Champlain Investment Partners, LLC: Emerging Markets Small Cap (+12.7% for the quarter)
  • Franklin Templeton Investments: Franklin India Equity (+11.9% for the quarter)

 

Global fixed income, measured by the FTSE World Government index, gained 1.04% during the quarter. Growing expectations of stimulated growth and inflation, due to the tax reform bill, resulted in increased U.S. Treasury yields and a flattened yield curve. Overseas, economic optimism continued, as bond yields received a boost when the ECB announced its intentions to reduce asset purchases, but extend the program. The Bank of England (BoE) hiked rates, which was highly anticipated, as the yield on the ten-year gilts decreased to 1.19% from 1.36%. Below are some of the strategies that make up the PSN Top Guns Global Fixed Income Universe.

  • BCM Beaumont Capital Management: Decathlon Conserv Tactics (+4.5% for the quarter)
  • Thomas J. Herzfeld Advisors, Inc: Herzfeld Fixed Income (+3.2% for the quarter)
  • BNP Paribas Asset Mgmt.: Global Inflation Linked Bonds Unhedged (+3.0% for the quarter)

 

The complete list of PSN Top Guns, and an overview of the methodology, can be located on www.informais.com under the “Resources” tab.  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 Ruth Calderon at ruth.calderon@informais.com.

 

Ryan Nauman
VP, Product and Market Strategist
Informa Investment Solutions
Tel: (800) 789-5323
Ryan.Nauman@informais.com
www.informais.com

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