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Global Tactical Asset Allocation

as of 9/30/17

Fund Commentary

Global financial markets experienced positive returns across most major asset classes in the third quarter. A combination of steady growth and low inflation in addition to strong corporate earnings growth helped markets largely look beyond a host of natural disasters and escalating rhetoric between the United States and North Korea. The constructive global growth environment has also allowed major developed market central banks to begin taking steps to gradually normalize policy.

The Global Tactical Asset Allocation Fund posted a total return of 3.68% for the quarter, compared with 3.44% for the Fund’s blended static benchmark. Our tactical positioning led to the Fund’s outperformance, offsetting modest implementation vehicle underperformance and slight underperformance from strategic positioning. Tactical positioning benefited from underweight exposure to investment-grade fixed income and overweight positioning in both non-U.S. developed market equities and emerging market equities.

We made one asset allocation change in the quarter that further increased the non-U.S. equity exposure of the portfolio. We increased exposure to non-U.S. developed market equities and emerging market equities, while decreasing the global real estate and global listed infrastructure allocations. The change was designed to increase the Fund’s allocation to non-U.S. equities while maintaining the risk profile of the portfolio and limiting exposure to interest-rate-sensitive risk assets. These changes leave the Fund with a continued appetite for risk, including overweight positioning across all major equity regions and high-yield fixed income, funded by a significant underweight to investment-grade fixed income.

Not FDIC insured | May lose value | No bank guarantee

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