A hot topic of the second quarter of 2018 was the escalating trade war undertaken by the current US administration, which met with considerable resistance from many in the investment community. One potential concern being cited by the opposition is that earnings expectations would be hit hard, especially for some of our trading partners and export heavy industries. However, this has not yet been the case, with the movement in earnings expectations for next year for some of our largest trading partners remaining insignificant for the time being. Many countries have seen modest net earnings expectation increases, with the notable exception of Japan. And, while Chinese stocks have largely fallen, earnings expectations have actually risen since the announcement of tariffs as other economic data settles in.
In the Saratoga International Equity Portfolios, on a sector basis, Consumer Staples holdings were the best performers on an absolute and relative basis while Industrials holdings were the worst relative and absolute return holdings. In the Industrial sector, several European holdings sold off over concern of rising tariffs for exports to the US. Regional performance in the quarter was quite varied, with Developed Americas performing well, while Emerging Americas experienced a sell-off. The Portfolio’s overweight to Emerging Americas was a significant drag on performance although stock selection in the region was favorable. The Portfolio’s largest sector allocation on an absolute basis is Financials, while Materials is the largest relative overweight. From a regional standpoint, Developed Europe is the largest absolute allocation, while Emerging Americas 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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