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Investing involves risk, including the potential loss of principal.
Before investing, carefully consider the fund’s investment objectives, risks, charges, and expenses of the investment company. This and other important information can be found in the fund’s prospectus. To obtain a copy, visit TIMOTHYPLAN.COM or call 800.846.7526. Read each prospectus carefully before investing.
Because the Timothy Plan Funds do not invest in excluded securities, the Funds may be riskier than other funds that invest in a broader array of securities. There are risks when a fund limits its investments to particular sized companies, and all companies are subject to market risk. The Fund recently experienced significant negative short-term performance due to market volatility associated with the Covid-19 pandemic.
MUTUAL FUND INVESTOR
To read more about our mutual funds, please click this link to access fund information, including the prospectus, fact sheets, performance, and holdings for each fund.A prospectus is available from the Fund or your financial professional that contains more complete, important information. Please read it carefully before investing. Mutual Funds distributed by Timothy Partners, Ltd. Member FINRA.
HEADQUARTERS: 1055 Maitland Center Commons, Maitland, FL
(800) 846-7526 | Send an email | View our mapMUTUAL FUND SHAREHOLDER SERVICES: c/o Ultimus Fund Solutions, Post Office Box 541150, Omaha, NE 68154-1150
(800) 662-0201 | Account AccessETF INVESTOR
To read more about our ETFs, please click this link to access fund information, including fact sheets, performance and holdings for each fund. A prospectus is available from the Fund or your financial professional that contains more complete, important information. Please read it carefully before investing. ETFs distributed by Foreside Fund Services, LLC, Member FINRA. Timothy Partners, Ltd. is not affiliated with Foreside Fund Services, LLC.
ETF SHAREHOLDER SERVICES: Contact your financial advisor for information regarding your account.
Macroeconomic Update
The U.S. economy rebounded meaningfully, with most forecasters predicting annualized GDP growth will exceed 4% in the second quarter. Business confidence remained high, driving employment gains and an uptick in hourly earnings. Federal government spending also increased following the passing of a $1.3 trillion spending bill in March.
Signs of inflationary pressures emerged, however, with companies highlighting tight labor markets, higher freight costs, and rising prices for energy and key raw materials. The Federal Reserve continues to respond with rate increases, resulting in some flattening of the yield curve as long rates rise at a more measured pace due to growing uncertainty about trade policy and its impact on growth.
The market steadied in the second quarter and returns were positive in all size and style segments. Growth styles continued to outpace value in large caps but value led in small cap. Small caps handily outperformed large and midcaps, likely due to being less exposed to trade disruption. The steady introduction of tariff s across several industries and across several countries raises the risk profile of greater inflation and a negative future impact on growth. Developments are being closely monitored.
Q2 2018 Performance Update
The portfolio (+4.3%) outperformed the Russell Mid Cap Growth (+3.2%) due to strength in the Health Care sector lead by Sarepta Therapeutics. Despite mediocre performance in the benchmark, alpha was generated by our stock selections in Financial Services and Technology sectors. The Producer Durables sector struggled due to investor concerns over operating margins and rising commodity prices.
Contributors
The top performer was Sarepta Therapeutics (SRPT, 1.5%)2, which returned 78.4% during the quarter. Sarepta reported incredibly strong clinical data in its first gene therapy program to treat Duchennes Muscular Dystrophy. Also, the company made a strong strategic move in partnering with Myonexus, another biotechnology company with a compelling gene therapy program for the treatment of Limb-Girdle muscular dystrophies.
Our investments within the cyber security software segment continue to generate alpha. The most noteworthy investment has been in Varonis Systems (VRNS, 2.5%) which gained 23% during the quarter. Greater focus is being spent by enterprises on data security, as corporations are rushing to stay ahead of the latest security threats.
Detractors
Our underperformers were both Producer Durables, Oshkosh Corp (OSK, 2.4%) and Belden (BDC, 0.0%). Oshkosh suffered a -8.7% return in the second quarter, while Belden returned -11.3%. While Oshkosh did not report disappointing earnings, Belden did report very weak results, due to margin weakness in several divisions. We have sold our position in Belden, but we continue to retain our position in Oshkosh.
Market Outlook
The issues causing the greatest concerns among investors are the potential of global trade wars and rising commodity costs which cause investors to shift their focus to sectors that have less direct exposure to those wildcards. Specifically, small cap companies that are in the Health Care and Technology sectors have a favorable risk profile as it relates to those issues.
We continue to find compelling investment opportunities, particularly in the medical device industries. Also, consumer spending has recovered, leading to more investment opportunities in gaming and retail industries. We remain focused on generating alpha and producing the strongest investment results over the long run.
The securities identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable.
The Index returns are provided to show an example of alternate return potential during the relevant time periods; however, indices may possess different investment attributes that may make comparisons difficult such as volatility, liquidity, market capitalization, and security types. The statistical data regarding the indices has been obtained from Bloomberg and the returns are calculated assuming all dividends are reinvested. The indices are not subject to any of the fees or expenses to which the portfolios are subject. This report assumes the reader has sophisticated knowledge of investing and the markets. If you require more information about the information presented, including the portfolio characteristics and risk statistics, please contact us.
Manager views expressed herein were current as of the date indicated above and are subject to change. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this commentary. A copy of the calculation methodology and the full list of recommendations made in the preceding year is available upon request. The performance data quoted represents past performance and does not guarantee future results. Performance returns quoted are gross of fees which were calculated on a time weighted basis and do not give effect to investment advisory fees, which would reduce such returns. Please see Chartwell’s Form ADV, Part II for a complete description of investment advisory fees. The following statement demonstrates the compound effect advisory fees have on investment returns: For example, if a portfolio’s annual rate of return is 15% for 5 years and the annual advisory fee for a client is 100 basis points or 1.00%, the gross cumulative 5 year return would be 101.1% and the five year return net of fees would be 92.5%. Actual fees charged to portfolios may be different due to various conditions including account size, calculation method and frequency, and the presence of a performance or incentive fee. The deduction of performance and incentive based fees will have similar, yet often larger, impacts to performance and account values than standard management fees. To receive a complete list and description of Chartwell Investment Partners’ composites, performance attribution for all securities, and/or a presentation that adheres to the GIPS® standards, please contact Lynette Treible by phone (610)407-4870, email treible@ chartwellip.com, or by mail to 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312.