Large-Cap Core Equity Portfolio Outlook, Positioning, and Attribution as of 6/30/2019

Outlook

  • The U.S. economic expansion continues. Despite slowing growth and early signs of economic impact from international trade tensions, we still view moderate growth as likely in the near-term.
  • The consumer remains a source of relative strength that should support continued expansion, with personal income and spending each still growing more than 4% year-over-year.
  • The current, partially-inverted shape of the yield curve is unsustainable, in our view, and some reduction in short-term rates seems the most likely path toward rate normalization.

Portfolio Positioning

  • We believe moderate growth and an advanced economic cycle warrant exposure to sectors with a mix of cyclical and secular drivers as well as sectors with limited economic sensitivity.
  • Information Technology and Communication Services should benefit from enterprise technology CapEx and ad spending as the economic cycle matures, as well as secular shifts toward cloud computing and digital advertising.
  • Sectors like Consumer Staples, Health Care, and Utilities provide stable earnings growth potential that investors should find attractive amid modest economic deceleration and equity market volatility.
  • We eliminated Financials exposure in light of slowing economic growth and the evolving interest rate environment.

Q2 Attribution

Positive Contributors:

Overweight
• Information Technology
• Communication Services

Underweight
•Energy

Negative Contributors:

Overweight
• Health Care
• Utilities

Underweight
• Financials

Attribution Analysis is relative to the S&P 500 benchmark and was current as of the date specified in this presentation. A complete attribution report is available upon request. The most recent complete presentation can be viewed here.
Any portfolio characteristics, including position sizes and sector allocations among others, are generally averages and are for illustrative purposes only and do not reflect the investments of an actual portfolio unless otherwise noted. The investment guidelines of an actual portfolio may permit or restrict investments that are materially different in size, nature and risk from those shown. The investment processes, research processes or risk processes shown herein are for informational purposes to demonstrate an overview of the process. Such processes may differ by product, client mandate or market conditions. Portfolios that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than a portfolio whose investments are more diversified.
Holdings, Sector Weightings, and Portfolio Characteristics were current as of the date specified in this presentation. The listing of particular securities should not be considered a recommendation to purchase or sell these securities. While these securities were among WestEnd Advisors’ Large-Cap Core Equity holdings at the time this material was assembled, holdings will change over time. There can be no assurance that the securities remain in the portfolio or that other securities have not been purchased. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities presently in the portfolio. Individual clients’ portfolios may vary. Upon request, WestEnd Advisors will provide a list of all recommendations for the prior year.