Large-Cap Core Equity portfolio outlook, positioning, and attribution as of 6/30/2022
June 30, 2022
- The U.S. and global economic cycles continue to progress rapidly. We expect the U.S. economic expansion to extend into 2023, but we have seen, as anticipated, signs of slowing growth in economic data.
- We believe the Federal Reserve’s recent shift toward more aggressive monetary tightening has exacerbated risks that the economic cycle could progress toward a late-phase slowdown.
- In this evolving environment, we now see increased risk to corporate earnings and, more broadly, to the performance of particularly economically sensitive parts of the markets.
- We expect earnings growth to vary significantly across U.S. sectors in 2022, as is typical during economic transitions and deceleration, and we believe sector allocation will be key to investment outcomes in the coming quarters.
- We have moved to a significant underweight of early-phase cyclical sectors, reducing exposure to Financials and Energy and continuing to avoid Industrials, Materials, and Real Estate.
- We have increased our overweight of the mid-phase Information Technology and Communication Services sectors, which we believe will benefit from positive secular earnings drivers and see less deceleration in revenue and earnings growth than more cyclical sectors.
- We have increased exposure to late-phase, defensive sectors by increasing our overweight of Health Care.
- Consumer Discretionary
- Health Care
- Communication Services
- Consumer Staples
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.
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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.