With the Federal Reserve continuing to raise interest rates and the US economy producing strong nominal growth, global liquidity is fleeing international capital markets and seeking the perceived safety of US assets. During the third quarter of 2018, and for much of the year, domestic markets have performed well, while many of their foreign counterparts have struggled. Despite the US economy’s strong growth, the Federal Reserve’s monetary policy normalization is beginning to impact certain sectors of the economy negatively. Housing activity and home price appreciation is beginning to slow, in part due to significant increases in mortgage rates. At this late stage in the economic cycle, we believe the two primary threats to sustained economic growth and rising equity markets are further monetary policy normalization by global central banks and sustained pressure on global supply chains from trade tariffs. In order for US equity markets to remain attractive we believe it is critical that the Federal Reserve allows sufficient time for capital markets to adjust to higher interest rates and declining liquidity.
During the quarter, the Saratoga Advantage Trust Mid Capitalization Portfolio posted positive absolute performance. Relative performance was driven by stock selection, most notably in Financials, Materials, and Communication Services. An underweight to Consumer Staples and REITs also benefited the Portfolio, while overweights to Energy and Utilities hurt the Portfolio. The Portfolio is overweight Consumer Discretionary, Financials, Energy, Utilities, and Materials while underweight REITs, Healthcare, Consumer Staples, Communication Services, Technology, and Industrials.
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.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Saratoga Advantage Trust mutual funds. This and other important information about the Saratoga Advantage Trust's funds is contained in the prospectus, which can be obtained by clicking here, or by calling (800) 807-FUND, and which should be read carefully before investing. The Saratoga Advantage Trust's funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC. Saratoga Capital Management, LLC is not affiliated with Northern Lights Distributors, LLC. 10/18 © Saratoga Capital Management, LLC; All Rights Reserved.