Mid Cap Diverse Leadership Fund Commentary (Formerly Mid Cap Core Equity Fund)
Equity markets displayed increased volatility in Q3 with returns varying significantly by sub-segment and sector. Mega-cap stocks performed the best overall, followed by large caps, both of which produced positive returns. Mid-caps had slightly negative returns and small caps trailed even further behind.
Growth indices outperformed their value counterparts in the large- and mid-cap space but small-cap growth lagged small-cap value by a wide margin. The financials, technology, and real estate sectors were among the most consistent performers for the quarter. The cyclical versus defensive trade was less clear as a sudden rise in interest rates and oil prices at the end of September upset some of the more established themes. Higher-quality stocks tended to have better performance for the third quarter as a whole, but there was a fair amount of variation during the quarter.
Positioning the Mid Cap Diverse Leadership Fund
Portfolio composition is subject to change.
The Fund is still leaning on some of the cyclical themes (financials, industrials, and consumer discretionary) as well as technology. From a style perspective, we also tend to hold more attractively valued names and those with higher quality and profitability metrics. In addition, the Fund continues to pursue companies we believe have lower environmental, social, and governance (ESG) risk and companies that have displayed more recognition for diverse leadership and strong governance principles.
Morningstar Star Rating
Overall Morningstar RatingTM out of 361 Mid Cap Blend funds (for the overall period, Institutional Shares) Morningstar star ratings are based on risk adjusted total returns.
Why should investors consider investing in this Fund?
Overall, domestic equities still appear to be attractive, especially considering alternatives in fixed income and emerging or developed international stocks. Likewise, mid-cap stocks may provide the right balance of risk and return given where we are in the current business cycle. Along these lines, the Fund provides exposure to compelling, mid-cap stocks in a manner that is generally less risky than many of the other funds in the mid-cap blend peer group, which can hold more small caps and more speculative names. The ESG aspect of the Fund may also appeal to some investors who wish to reduce that risk and invest in companies that are working on issues of fairness with and between employees.
An investor should consider a fund’s investment objectives, risks and charges and expenses carefully before investing or sending money This and other important information about an investment company can be found in the fund’s prospectus. To obtain a Cavanal Hill Funds prospectus or summary prospectus, please call 800-762-7085 or visit us at www.cavanalhillfunds.com. Please read it carefully before investing.
Past performance is no guarantee of future results.
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Not FDIC Insured | No Guarantee | May Lose Value