March 31, 2017, PNC Large Cap Growth Fund became PNC Multi-Factor Large Cap
Growth Fund. The Fund's strategies and risks changed as the Fund will now
pursue a multi-factor approach. Please see the prospectus for additional
Multi-Factor Large Cap Growth Fund (class I) returned 6.87% in the third
quarter versus a return of 5.90% for the Russell 1000 Growth Index.
the market, momentum factors–both price and earnings–continued to show strength
during the third quarter with price momentum being one of the strong factors
overall for the quarter. Value factors struggled for most of the quarter, with
an improvement during the last few weeks of the quarter. Growth stocks continued
to lead value stocks during the quarter, despite value outperforming growth for
the month of September.
investment team’s multi-factor model and momentum factors–both price and
earningscontinued to show strength during the quarter, which led to positive
alpha. (The excess return of a fund relative to the return of the benchmark is
a fund’s alpha). Additionally, it appeared that earnings disappointments drove
the market more than earnings beats and a portion of the Fund's outperformance
came from having fewer disappointments than the broader market
For the Fund, stock selection was the main contributor to outperformance during the quarter with holdings in the Consumer Discretionary, Information Technology, and Consumer Staples sectors contributing the most. Sector allocation overall was a contributor to relative performance with the underweight to the Consumer Staples sector contributing the most and the underweight to the Information Technology sector detracting the most.
Fund's managers saw clear strength in their multi-factor model in the third
quarter and they continue to see a shift from multiple expansion driving stock
prices to earnings growth leading the markets. Their belief remains that
earnings drive stock prices, especially over the long run, and they remain
confident in their investment process as they progress through the remainder of
2017 and beyond. In addition, they continue to see a shift from multiple
expansion driving stock prices to earnings growth leading the market markets.
On March 31, 2017, PNC Large Cap Growth Fund became PNC Multi-Factor Large Cap Growth Fund. The Fund's strategies and risks changed as the Fund will now pursue a multi-factor approach. Please see the prospectus for additional information.