The stock market posted solid gains during the third quarter, as concerns about global growth eased. Investors remained somewhat nervous about the potential pullback in the Federal Reserves quantitative easing program, which most expected would begin following the Feds September policy meeting. But, the Fed decided to stay the course, continuing its monthly $85 billion bond purchases. Stock investors responded enthusiastically, pushing the S&P 500® Index to a new high. In the final days of the quarter, though, anxiety about a looming U.S. government shutdown weighed on stocks. Overall, a risk-on sentiment prevailed, with the materials, industrials and consumer discretionary sectors driving the markets higher. Defensive sectors, such as telecommunications services, utilities and consumer staples, lagged.
The Large Cap Equity Fund posted a total return of 5.70% for the quarter, compared with 5.24% for the Funds benchmark, the S&P 500® Index. Strong stock selection in the healthcare and information technology sectors, combined with an underweight position in telecommunications services, aided the Funds relative performance. Stock selection in the consumer discretionary, utilities and energy sectors detracted from relative results.
Market volatility likely will continue during the remainder of 2013, driven by the ongoing battle surrounding the federal governments spending plans and debt ceiling, along with economic data and Fed communications. Our disciplined stock-selection process looks for multi-year outperformers that meet our expected return targets over time. We intend to opportunistically use any market volatility to find attractive entry points into companies with competitive advantages, better-than-average growth prospects and reasonable valuations.
If you are a growth-oriented, moderate-risk investor looking for long-term capital appreciation without concern for current income, you will want to consider this fund as a core holding for your portfolio.
- Combine forward looking fundamental stock analysis and intelligent portfolio construction with the goal of providing consistent returns over time.
- Actively manage risk levels to be commensurate with performance objectives and avoid unintended risks.
- Maintain a core-style fund that invests primarily in large-cap stocks with some mid-cap exposure.