Financial markets performed relatively well in the first
quarter of 2017. Global equity markets extended gains that began in earnest
last November in reaction to the GOP sweep in U.S. elections. Though apparent
enthusiasm about better growth prospects may explain gains in the prices of
shares and industrial commodities, these gains occurred amid sideways action
for bond yields and the U.S. dollar. A Federal Reserve interest-rate tightening
in late March was well telegraphed and presented as a benign result of Fed
confidence in the economy, and had little adverse effect on markets.
Indications of improving fundamentals in Europe and Japan also contributed to
improving confidence in economic expansion going forward
In the U.S.,
the job market remained reasonably healthy. Economic performance in the
services sector firmed for the quarter, evidenced by upbeat news from surveys
and decent gains for services jobs. In addition, manufacturing signals
continued to improve, signaling an end to the pressures emanating from the 2015
dollar rebound and plunge for oil prices.
For the quarter the S&P 500 Index2 rose by
6.07% and the Nasdaq Composite Index2 was up 10.13%. The MSCI Euro
Index2 also advanced, climbing 8.46%. Emerging economy equity
markets did quite well, with the benchmark MSCI Emerging Markets Index2 up 11.45%. Sovereign debt markets largely moved sideways. Yields on both German
and U.S. ten year notes jumped early in March, and then reversed course, ending
the quarter little changed. Oil prices ultimately changed little as West Texas
Intermediate (WTI) oil prices finished the quarter a bit lower than where they
began at around $50 per barrel. Similarly, the dollar bounced around during the
quarter and ended with a mild decline.
In terms of market capitalization, large cap stocks gains
were more than double that of small cap stocks, as the Russell 10002 and Russell 20002 indexes posted quarterly returns of 6.03% and 2.47%,
respectively. As for investment style, growth stocks took the reins in the
quarter as the Russell 1000 Growth Index2 and the Russell 1000 Value
Index2 posted quarterly returns of 8.91% and 3.27%, respectively.
Growth Fund posted a return of 9.96% for the first quarter, outperforming its
benchmark, the S&P 500 Index, which returned 6.07%.
Contributors4: Stock selection and an overweight allocation in the
Information Technology sector3, strongest-performing sector of the
benchmark index, was the largest driver of performance during the period. The
Fund’s lack of exposure to the Energy sector, the weakest-performing sector of
the benchmark index, also aided performance. The Fund benefitted from stock
selection and an overweight allocation to the Consumer Discretionary sector as
selection in the Health Care sector was the largest detractor from performance,
as several of the Fund’s Health Care Equipment & Services positions failed
to match the benchmark return during the period.
For more information, please click here for the Marsico Growth Fund Quarterly Investment Update.