During the month of June, our small cap growth benchmark, the Russell 1000 Growth Index lost 5.51% (). The only bright spots during the month were the communication stocks and the health care stocks. All other sectors in the portfolio performed negatively and the worst performing sector was the materials sector. Volatility was significant during the month and the market lacked any clear direction or leadership. We believe the main culprit for the drop in the market was fear and uncertainty. Economic indicators were a mixed bag and the market perceived the lack of a convincing backdrop for sustained economic recovery.
On the flip-side, it should be noted that the Fed has slightly changed its stance and included language in its latest statement that suggests the economic recovery is proceeding, albeit with some obstacles to overcome. We have the same opinion and feel that this recovery is real and will continue. In our view, the obstacles will be unemployment and the lack of the availability of credit. This is not unusual as these two obstacles are fairly persistent in every economic recovery. We would have been surprised by the markets negative reaction to the lackluster economic news, except for the persistent feeling of weariness amongst investors. In our opinion, two bear markets in 8 years have taken away the ability of the market to look forward. We believe the market is truly reacting on “what have you done for me lately.” Historically, these have been the times when the market presents buying opportunities. As Warren Buffet once said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” We believe that the AlphaMark Large Cap Growth Fund is positioned to take advantage of this time.
Model Summary: Large Cap Growth Model is grounded by an appreciation of risk. Equities selected with sustainable business models, reliable cash flows and strong management. The minimum market cap of this model is $5 billion.
Top Holdings: Dolby Laboratories (DLB), Novo Nordisk (NVO), Discovery Holding (DISCA), Intercontinentalexchange (ICE) and Johnson & Johnson (JNJ).
