Kai W. Hong, CFA
Managing Director & Chief Investment Strategist

Thirty days of relative calm in the markets were punctuated by a sharp sell-off on the last day of the month. Economic data was generally positive with good manufacturing data coming out of the U.S. and China, capped by a strong rebound in second-quarter US GDP to a seasonally-adjusted 4%. Deflation once again became a concern in Europe, along with the realization that the ECB will likely have to maintain its accommodating policy for much longer than its UK and US peers. The drama regarding Argentina’s overdue debt payment and concerns surrounding Portugal’s banking system slightly dampened enthusiasm. The U.S. and its Western allies imposed additional sanctions on Russia due to the ongoing Ukraine crisis, which was tragically highlighted by the downing of a Malaysian Airlines flight in the area.

Although the risk factors were somewhat mixed, active manager performance was generally positive. Smaller size and momentum were fairly negative, while defensive characteristics held up better. In a manager style context, core and value managers were more positive while growth managers, particularly those levered to high-growth stories, were more challenged.