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Brookmont Capital Dividend Equity Strategy Commentary

Posted by WrapManager's Investment Policy Committee

August 25, 2015

Brookmont Capital's Dividend Equity Strategy provides their Second Quarter report covering perspective on foreign markets, more assumptions on interest rates and how they positioned their portfolio in response. 

“The markets struggled to move higher during the second quarter due to a conflux of bad news from foreign markets and earnings disappointments from several domestic companies. The markets took their biggest hit during the month of June as fears about Greece, China’s economy, and second quarter earnings announcements led to widespread sales activity. 

The Dividend Equity Strategy was repositioned during the second quarter in anticipation of increasing risk in the equity markets. Valuations were becoming stretched based on expected earnings growth and consensus assumptions that the Federal Reserve will raise short-term interest rates during the second half of the year. 
During the second quarter we reduced our position in mid-cap stocks by 50% and now represent only 16% of the portfolio. This is our lowest weighting in small and mid-cap stocks since early 2009. This market sector outperforms during the early stages of an economic recovery and has historically underperformed when interest rates rise and the market cycle has peaked. 

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