TORIX – Q3 2018 Commentary
The Tortoise MLP & Pipeline Fund had positive returns during the third quarter following a very strong second quarter. The team believes that energy fundamentals are outstanding following expectations that U.S. production growth for crude oil and natural gas will continue over the next five years.
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TIREX – Q3 2018 Commentary
The TIAA CREF Real Estate Securities Fund had modest gains during the third quarter, slightly underperforming its benchmark. The strategy continues to avoid sectors that are historically sensitive to higher interest rates and has benefited from allocations to sectors driven by economic growth including apartments and data centers.The fund is focused on high-quality companies with strong growth profiles, good balance sheets, and superior assets in the strongest metro areas.
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WATFX – Q3 2018 Commentary
The Western Asset Core Bond Fund outperformed the Agg during the quarter, supported by its allocation to investment grade credit and a small allocation to dollar-denominated EM debt. The team believes that the Fed does not have a set plan for rate hikes and could adjust going forward based on economic growth and inflation numbers.
HLMEX – Q3 2018 Commentary
The Harding Loevner Emerging Market Fund underperformed the broad emerging market index during the quarter as we saw value outperform growth for the first time in nearly two years. Negative performance was driven by the more growth oriented names in the portfolio, specifically those in China. Much of the benchmark’s performance hinges on China, and the team believes that they are positioned defensively to combat regulation while still taking advantage of the growth opportunity China does offer.
HILIX – Q3 2018 Commentary
The Hartford International Value Fund had a strong quarter, returning over 1.5% and outpacing its benchmark. The team remains focused on finding companies with low prices, low expectations, and low valuations. On an absolute basis, value has underperformed growth but the Hartford fund continues to outperform its peer group on a long term relative basis.
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TCPNX – Q3 2018 Commentary
The Touchstone Impact Bond Fund performed exactly in line with the Agg during the quarter. The team maintains its allocations to higher quality and less economically sensitive sectors and does not take duration or curve positioning bets. The team believes that they are well positioned to take advantage of political and market headwinds.
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BEXIX – Q3 2018 Commentary
Baron Emerging Markets Fund underperformed during the third quarter during a rough period for emerging market equities as a whole. The team points to the U.S. administration’s “America First” agenda as the main catalyst for poor performance, and believes that a truce or visible trade agreement between China and the U.S. could turn this trend around. The Baron team remains confident in its unique forward-looking and bottom-up fundamental approach and remains attuned to developing themes and opportunities.
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In the Q3 review for Equity Market Neutral, AQR reiterated how they look at their four investment themes, broke down performance attribution, and further discussed how to address the underperformance of value.
I summarize these three topics below, and I have attached a new one-page piece they created that provides a look at performance, market environment, and outlook.
LISIX – Q3 2018 Commentary
While the international developed market has struggled, Lazard International Strategic Equity was up almost 1.5% through the end of September. The team has made a strong turnaround in the past year, ranking in the top decile relative to peers during that period. Lazard believes that its focus on selecting quality, high growth stocks should help the strategy to continue outperforming.
As a follow up to this morning’s meeting, I have attached the presentation about AQR Market Neutral. This piece is for internal use only.
I will be making minor updates to the single page slide to better reflect recent performance and our general outlook. I will get this approved for use in client decks.
Thank You,
Pete
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
