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Market Commentary

1Q 2019

During the quarter, US stock prices surged as sentiment improved regarding both monetary policy and US-China trade negotiations.

Select Equity trailed during January, then outperformed during February and March.  All quant portfolios out performed for the quarter overall. Most large cap portfolios generated all of their excess returns during the January. Mid Cap and small cap portfolios were able to outperform in both January and March.

The investment results cited are those of OakBrook composites representing all accounts managed in a similar manner in a particular strategy. The results shown are total return calculations that include price changes and accrued dividends and other earnings. All realized and unrealized gains and losses, as well as dividends and interest from investments and cash balances, are included. Unless otherwise indicated, returns are gross of management and custody fees, and net of all other expenses. Actual fees would have reduced the returns shown by up to 85 basis points annually for the Select Equity Composite, up to 40 basis points annually for each Enhanced Index Composite, except Enhanced SMID which is up to 60 basis points annually, up to 75 basis points annually for Quantitative Small Cap, and up to 100 basis points annually plus a 20% incentive fee on returns in excess of a specified hurdle rate and a high water mark for Market Neutral. The investment results cited for the OakBrook Market Neutral Composite are gross of management fees, incentive fees and other expenses. Please refer to complete disclosures previously provided and that are available upon request. Composite inclusion criteria are available upon request. 

The simulated results for OakBrook’s Style Indices are based on total return calculations that include price changes and reinvestment of accrued dividends and other income. Investments are stated at value and transactions are accounted for on a trade date basis. As with other indices, returns are gross of all fees and expenses, including management fees, broker commissions and market impact costs. A proprietary computer program is used to determine the holdings of the OakBrook Style Indices.  OakBrook Investments, LLC manages funds for the composites shown and calculates the Style Index returns used to evaluate performance on the prior page. Full details on the methodology used to determine the Style Index constituents are available upon request.

The Index returns cited from providers other than OakBrook Investments are unmanaged baskets of stocks generally considered to be representative of the types of stocks held in a particular composite. This information is provided for comparison purposes only and has been obtained from sources that we believe to be reliable, however, we cannot guarantee the accuracy of the data provided.

Past performance is not indicative of future results. This material is for informational purposes only and should not be considered a solicitation to buy or an offer to sell securities or to provide investment advisory services. 

March 2019

During March, trade continued to be a dominant theme.  US stocks started the month with a solid gain as investors shrugged off weaker than expected manufacturing data delivered on Friday, March 1.  Sentiment shifted over the weekend following the release of two studies highlighting the negative impact of the current trade war on the US economy showing the burden falling mainly on consumers. Stocks declined the entire week, leaving the S&P 500 down more than 1.4% for the month overall at the March 8 close.  On March 11, the combination of a solid retail sales report and Nvidia’s announcement that it planned to purchase Mellanox launched a strong three-day rally.  By the close on March 13, the S&P 500 was up 0.9% for the month overall. On March 14, US stocks posted a modest decline following reports that an expected meeting between Presidents Trump and Xi to sign a US-China trade deal would likely be postponed until April. The US stock market rally resumed on March 15 helped along by China’s announcement of a cut in value-added taxes and a stronger than expected earnings report from Broadcom.  On March 20, a surprisingly dovish statement from the Federal Open Market Committee following the conclusion of its policy meeting prompted a sharp rally in US equities. Although the US market was unable to sustain this rally through the close, follow through in foreign equity markets prompted a sharp rise in US equities the next day. By the March 21 close, the S&P 500 was up 2.5% for the month overall.  On March 22, a report of weaker than expected German manufacturing data raised concerns about slowing global economic growth and triggered a world-wide selloff in equities. The arrival of senior US officials in China on March 27 raised hopes that trade negotiations were nearing completion and helped the US market close the month with a two-day rally.

Select Equity benefited from its general emphasis on stable stocks.  Mid cap and small cap quant performed well. Large cap quant portfolios trailed due to being overweight Biogen as the stock declined 30%. Extended Large Cap was hurt by timing of a client withdrawal request.

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