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The Holmes Growth Fund outperformed its benchmark, the S&P 1500 Composite Index, by 189 basis points in May, rising 4.29 percent for the month compared to a gain of 2.40 percent for the index. For complete fund performance, click here.
- Stock selection was strong overall and particularly so within the consumer discretionary, industrials and health care sectors, which all positively contributed to the fund's performance.
- Sector allocation also aided performance with the fund largely missing the underperformance in consumer staples, utilities and telecommunication services.
- Key positive contributors to fund performance included OpenTable Inc., Old Dominion Freight Lines Inc. and Priceline.com Inc.
- Stock selection within technology underperformed and was a relative drag on performance.
- The fund was underweight the best-performing financial sector.
- Positions that did not fare well during the month included LinkedIn Corp., DXP Enterprises Inc. and D.R. Horton Inc.
- With unprecedented levels of global monetary stimulus the U.S. equity market is responding. Combined with a resurgent housing market and the associated wealth effect, consumer confidence is at a five-year high.
- Corporate cash levels are high, providing corporations the ability to pursue mergers and acquisitions (M&A). An increase in M&A activity holds promise for both portfolio gains and for an increase in overall market valuations.
- The market has staged an impressive rally since the beginning of the year and a pullback would not be a surprise.
- Interest rates have begun to move higher and the Federal Reserve is talking of "tapering" its quantitative easing program, which could be a catalyst for a selloff.
Past performance does not guarantee future results.
The S&P 1500 Composite Index is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600. The index was developed with a base value of 100 as of December 30, 1994.
Holdings in the Holmes Growth Fund as a percentage of net assets as of 3/31/2013: D.R. Horton Inc. 2.32%; DXP Enterprises Inc. 1.83%; LinkedIn Corp. 2.88%; Old Dominion Freight Lines Inc. 2.60%; OpenTable Inc. 2.06%; Priceline.com Inc. 1.50%.