Investors seem to have growing concerns over whether or not Trump’s purported agenda of corporate tax reform, broad regulatory relief, infrastructure spending, and healthcare reform will be implemented; however, capital markets remain well supported by improving economic survey data, “soft data,” low interest rates, liquidity injections by foreign central banks, and continued credit creation in the unregulated banking system. That being said, we believe that margins and equity valuations are at or near all-time highs and that the business and credit cycles are quite mature. The Federal Reserve has begun raising interest rates. Although interest rates should increase at a measured pace, risks may be heightened compared to prior rate hike cycles in light of current valuations and the leverage that remains globally in both the private and public sectors. To continue to support current valuations and expect further market appreciation, credit markets likely need to remain a material supplier of liquidity at low real rates. With earnings estimates for 2017 declining modestly during the quarter, it is important for nominal GDP growth, industrial production, and consumer spending to increase in coming quarters to justify the price appreciation equity markets have experienced over the trailing twelve months. Therefore, we continue to believe that new pro-growth fiscal policies are necessary to achieve earnings expectations in 2017 and 2018.
During the quarter, the Saratoga Mid Capitalization Portfolio benefited from Technology, Materials, and Consumer Discretionary sector allocations, while Health Care, Energy, Financials, and Industrials detracted from performance. The Portfolio is overweight Financials, Health Care, Technology, Energy, and Materials while underweight REITs, Utilities, Consumer Staples, 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. 1/16 © Saratoga Capital Management, LLC; All Rights Reserved.