Summary of Month’s Action:
The S&P 500 advanced 2.8% during February, outpacing its international counterparts, and greatly outperforming bonds, which were negative. Value trounced benchmarks this month, quality outperformed, and momentum and minimum volatility lagged. Energy returned 24% last month, Financials 11% and Industrials 7%. Sector laggards during February were Utilities, Healthcare and Consumer Staples, which fell 6%, 2%, and 1%, respectively.
Lincoln Capital’s tax-exempt model underperformed its benchmark for the month. Our sector positioning was a headwind given our biggest overweight is Healthcare and our biggest underweight is Industrials. The top contributors to performance this month were Citizens Financial Group, JPMorgan and Emerson Electric, which gained 20.4%, 14.4% and 8.9%, respectively. Detractors included CVS Health, Amgen, and Mondelez, which declined 4.9%, 6.1%, and 4.1%, respectively. The individual stock performances aligned well with their respective sectors. Banks performed exceptionally well as the 10-year treasury entered the month at 1.11% and exited at 1.44% – this development, if it holds, will bolster future profits at the banks.