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Worsening expectations for global economic growth, elevated trade tensions and fears of rising interest rates in the US sent global markets into correction territory. Despite the difficult backdrop, however, we were encouraged with the International Small Cap Strategy’s relative outperformance over the period.
The most notable factor driving the portfolio’s quarterly performance was the turn in emerging markets (EM) stocks, which stabilized in September and have outperformed global markets since.
From a portfolio construction perspective, there was a continued pro-cyclical bias in our holdings, with overweights in materials, industrials, financials and energy.