The fourth quarter of 2018 brought substantial losses for all major equity markets – though, generally speaking, losses were smaller in non-US markets than in the US. Emerging Markets actually played the role of safe haven for the quarter relative to other equity markets. US earnings growth dominance shifted to favor Emerging Markets in October; investors search for growth surely played a role, but Emerging Markets valuations are also attractive in our opinion. Markets tend to hate uncertainty and there is no lack of it right now. There is a leadership vacuum developing in Europe: May, Merkel, and Macron have all suffered setbacks. At the same time, populism is raising its head again in places like Italy, the Netherlands, and Brazil. The probability of a “no deal Brexit” is rising. Chinese growth has slowed, and it is not clear their stimulus will suffice or that a trade deal with the US will be reached. Add these issues to political instability in the US, and it is not surprising that stocks have been a bit of a scapegoat of late.
Within the Saratoga International Equity Portfolio, Utilities and Real Estate holdings were the best performers on an absolute basis; Utilities were also the best relative performers.Materials and Industrials companies were the worst performers on an absolute basis, while Consumer Staples were the worst performers on a relative basis.On a geographic region basis, Emerging Americas was the top performing region, while Developed Americas was the worst performer.The portfolio’s largest sector allocation on an absolute basis is to Financials while Health Care is the largest relative overweight sector. From a regional standpoint, Developed Europe is the largest absolute allocation, while Developed Asia is the largest relative overweight.
Information contained herein was obtained from recognized statistical services and other sources believed to be reliable and we therefore cannot make any representation as to its completeness or accuracy. Any statements not of a factual nature constitute opinions which are subject to change without notice.
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