Central banks continued to play a pivotal role in guiding investor sentiment during the second quarter. Signs of slowing growth, increased market volatility and trade tensions were enough to convince them that potential downside risks warranted a response. At its June meeting, the U.S. Federal Reserve clearly articulated the potential for policy rate cuts in the second half of 2019. The European Central Bank and the Bank of Japan conveyed similar messages. This shift improved investor sentiment and drove credit spreads lower; they finished the quarter slightly below where they began.
Within the portfolio, we have found a number of attractive credits in consumer noncyclical industries where management teams are committed to reducing debt assumed for mergers and acquisitions. As a result, our portfolios have holdings in tobacco and pharmaceuticals, industries in which we remain overweight.
We also remain overweight midstream energy companies (pipelines) and utilities. Many midstream energy companies have been dedicated to improving their balance sheets after a spate of bankruptcies in the sector in early 2016. The utilities sector, broadly, has been in a period of stable regulatory regimes, with some notable exceptions like California. However, even in California significant progress has been made to mitigate the risks and liabilities associated with wildfires.
For the quarter, the portfolio slightly lagged the benchmark Bloomberg Barclays U.S. Long Credit Index. The index returned 7.02% for the quarter, which is a very high absolute figure that reflects both the significant downward move in interest rates and tightening credit spreads. Relative to the index, the portfolio had positive results from security selection. Energy and health care holdings were positive contributors to relative results, while an underweight to communications companies was negative. However, a significant portion of the security return was offset by sector/industry allocation.