Large-Cap Core Equity portfolio outlook, positioning, and attribution as of 6/30/2019
June 30, 2019
- 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.
- 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.
- Information Technology
- Communication Services
- Health Care