Real assets stocks posted good overall gains for the first quarter, but the performance of underlying subsectors was mixed. Precious metals shares were solidly positive and recovered ground after a prolonged slide over the past few years. Global real estate stocks also turned in good results, particularly in the U.S., amid heightened geopolitical tensions and investor concerns about the potential for less accommodative U.S. monetary policies. Natural resources stocks slightly outpaced the broader equity markets, helped by a harsh U.S. winter and geopolitical tensions in the Ukraine. Industrial metals shares, which have accounted for the bulk of global demand growth in recent years, fell modestly due in part to disappointing economic data from China.
The Real Assets Fund returned 4.71% in the quarter compared with 1.21% for the MSCI All Country World Index and 3.58% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended March 31, 2014, the fund returned 3.63% versus 17.17% for the MSCI All Country World Index and 7.20% for the Lipper Specialty/Miscellaneous Funds Average. The fund's 1-year and Since Inception (07/28/2010) average annual total returns were 3.63% and 5.42%, respectively, as of March 31, 2014. The fund's expense ratio was 0.86% as of its fiscal year ended December 31, 2012.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The Real Assets Fund charges a 2%
redemption fee on shares held 90 days or less.
The performance information shown does not reflect the deduction of the redemption fee;
if it did, the performance would be lower.
Natural resources stocks represent the portfolio largest absolute position and largest overweight versus the benchmark. Energy exploration and production companies that are reducing costs and accelerating growth through the development of their assets continue to be an area of focus. North American shale producers look particularly attractive over the long term. Our stock selection in office U.S. REITs contributed significantly to first-quarter returns, helped by a focus on top-quality properties with high barriers to competition. Apartment REITs also aided results, as holdings in middle- to upper-market communities in Sunbelt regions did well. Many West-Coast markets have limited supply, which benefited firms with good fundamentals.
We expect modest global economic growth over the next few quarters. Improved housing and labor markets, muted energy prices, and diminished fiscal headwinds support the ongoing U.S. recovery. Europe's shallow recovery should continue and stimulative policies have boosted Japan's economy, but the sustainability of both will depend on more challenging structural reforms. Many emerging markets remain vulnerable to rising U.S. interest rates. Modest global growth is likely to weigh on energy and materials demand, while increased production capacity has increased supplies. Fundamentals on REITs are favorable, yet valuations remain rich despite recent underperformance. Even if the near-term environment presents challenges, we believe the market will reward our disciplined and consistent approach to investing over the long term.