Performance Review

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Annualized Performance
as of 12/31/2017
3 MO:5.43%
YTD :33.27%
1 YR:33.27%
3 YRS:10.59%
5 YRS:10.76%
10 YRS:4.34%

Performance quoted represents past performance and does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here.

For Benchmark information click here

The views expressed in this investment report represent the opinions of PNC Capital Advisors, LLC and are not intended to predict or depict performance of any investment. All information contained herein is for informational purposes and should not be construed as investment advice. It does not constitute an offer, solicitation or recommendation to purchase any security. The information herein was obtained by various sources; we do not guarantee its accuracy or completeness. Fund performance quoted above is for class I shares. Past performance does not guarantee future results. These views are as of the date of this publication and are subject to change based on subsequent developments.

International investments are subject to special risks not ordinarily associated with domestic investments, including currency fluctuations, economic and political change and differing accounting standards that may adversely affect portfolio securities. These risks may be heightened in emerging markets. Investments in value companies can continue to be undervalued for long periods of time and be more volatile than the stock market in general. Investments in growth companies can be more sensitive to the company's earnings and more volatile than the stock market in general. The Fund may invest a portion of its assets in derivatives. Derivative instruments include options, futures and options on futures. A small investment in derivatives could have a potentially large impact on the Fund’s performance. The Fund may be unable to terminate or sell a derivatives position. Derivative counterparties may suffer financial difficulties and may not fulfill their contractual obligations.

PNC International Equity Fund (class I) returned 5.43% in the fourth quarter versus a return of 5.00% for the benchmark MSCI ACWI ex USA Index.

Growth Strategy

Positive stock selection effect was offset slightly by a negative country allocation effect. Sector allocation also detracted slightly from the Fund's performance this quarter.

Outperformance associated with the country allocation effect included the investment team's overweights to Singapore, Korea, and Thailand. Large positive impacts also came from underweights to Mexico, Spain, and France. Detracting from performance were overweights to Germany and Norway, along with underweights to Japan and South Africa.

From a sector allocation perspective, underweights to the Utilities and Financials sectors added to performance. Overweights to the Materials and Consumer Discretionary sectors aided performance as well. The investment team's underweight to the Energy sector detracted from performance, as it was the second best-performing sector during the quarter behind the Materials sector. Stock selection in the Information Technology, Consumer Discretionary, and Consumer Staples sectors aided overall performance, while stock selection in the Financials, Real Estate, and Materials weighed negatively on overall performance.

In the broader market, tax reform in the U.S. dominated the global news flow. There was also continued investor debate around the number of Federal Reserve interest-rate hikes in 2018 and what that means for global equities, especially emerging markets, which continued to rally.

In Asia, China's growth moved ahead with imports and exports continuing to beat expectations, but the property sector clampdown impacted the local real-estate market – prices dropped across the country, especially on the high end. The much-anticipated power transition in China happened smoothly and Xi Jinping will remain the leader of China for the next five years. In India, growth was negatively affected by recent reforms (demonetization and a goods and services tax). Additionally, inflation continued rising and valuations remained high despite the deterioration in the current-account deficit. Korea was impacted by a global tech downgrade, which hit most Korean tech names. The Bank of Korea raised rates and the won strengthened. The country is also working on improving its relationship with China. Southeast Asian countries benefitted from a low inflationary environment and growing consumer confidence.

The European economy is demonstrating strong cyclical growth that is broad-based across sectors and geographies. The European Central Bank remains committed to its reduced level of quantitative easing, providing continued liquidity to the markets. Both the IHS Markit purchasing managers index (PMI) for the Eurozone manufacturing sector (currently above 60) and European consumer confidence are at the highest levels in 16 years. Unemployment levels continue to decline and inflation remains subdued.

Value Strategy

Outperformance was attributed to positive absolute returns in eight sectors, with the greatest contributions from Consumer Discretionary and Materials. After a lackluster 2016 due to lower commodity prices, Materials surged in 2017 with the majority of holdings up in excess of 20%. Financials, Industrials and Energy also contributed measurably. Utilities and health care holdings were in negative territory.

Global macro-economic growth was on an upswing, as evidenced by strong corporate earnings, heated merger and acquisition activity, and increased consumer spending. As would be expected in such an environment, cyclical sectors including Materials and Consumer Discretionary, as well as Consumer Staples, dominated performance.

Supply-demand fundamentals remain resilient in the Materials sector, with demand originating in Asia and translating into renewed economic growth in Europe and more recently, the U.S. The reduction in tax rates in the U.S. ultimately will be positive for corporate cash flows and valuations. We believe that freed-up cash flow will go into further investments and capital spending, which could stimulate investment growth in the world economy.

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown here. Select a Fund to view the most recent month-end performance information or go to each Fund's snapshot page to view most recent month-end performance as well as any waiver or expense reimbursement information.

The information contained in this piece should not be considered legal or tax advice; questions regarding your specific situation should be directed to your legal or tax advisor.


You should consider the investment objectives, risks, charges, and expenses of the PNC Funds carefully before investing. A prospectus or summary prospectus with this and other information may be obtained at 800-622-FUND (3863) or Please read it carefully before investing.

PNC Capital Advisors, LLC, a subsidiary of The PNC Financial Services Group Inc., serves as investment adviser and co-administrator to PNC Funds and receives fees for its services. PNC Funds are distributed by PNC Funds Distributor, LLC, which is not affiliated with the adviser and is not a bank.

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