Real assets stocks posted strong overall gains for the second quarter, driven by positive performance in all underlying subsectors. Precious metals extended their first-quarter rebound from a prolonged slide, helped by falling U.S. interest rates and heightened geopolitical tensions in the Middle East and Eastern Europe. Energy shares rose as sectarian violence in Iraq drove prices higher and investors became more comfortable with the staying power of the global economic recovery. Real estate stocks provided good returns during the quarter, with global real estate investment trusts (REITs)performing particularly well. The domestic lodging segment was strong, advancing to catch up with other industries after a muted first quarter.
The Real Assets Fund returned 8.47% in the quarter compared with 5.23% for the MSCI All Country World Index and 3.40% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended June 30, 2014, the fund returned 24.04% versus 23.58% for the MSCI All Country World Index and 14.55% for the Lipper Specialty/Miscellaneous Funds Average. The fund's 1-year and Since Inception (07/28/2010) average annual total returns were 24.04% and 7.27%, respectively, as of June 30, 2014. The fund's expense ratio was 0.85% as of its fiscal year ended December 31, 2013.
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 our largest absolute position and our largest overweight versus our benchmark. U.S. oil and gas exploration and production companies generated strong double-digit gains, as did shares in the related oil and gas storage and transportation industry. Energy exploration and production companies that are reducing costs and accelerating growth continue to be an area of focus, particularly North American shale producers. Stock selection in shopping center REITs, regional malls, and office properties contributed positively to fund performance. Favorable trends in employment have provided a boost to our office holdings, one of which is a large owner and operator of properties in the southeastern U.S.
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 over the long term, while increased production capacity has increased supplies. Fundamentals on REITs are favorable, yet valuations remain rich. 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.