Stocks in Asia ex-Japan rallied in the second quarter. India led the region as the domestic Sensex index rose to record highs after May's landslide victory of the opposition Bharatiya Janata Party (BJP), which investors believe will overhaul India's economy. Chinese stocks posted milder gains as the economy showed signs of stabilizing after weaker-than-expected growth early this year, aided by targeted stimulus measures. Indonesian stocks rose slightly as investors digested recent gains in the country, which is Asia's best performer year-to-date, and anticipated volatility ahead of July presidential elections. Philippine stocks rallied as investors bet on stronger economic growth after a first-quarter slowdown. Stocks in Thailand surged after a military coup in May restored some stability after months of antigovernment protests.
The New Asia Fund returned 7.59% in the quarter compared with 7.30% for the MSCI All Country Asia ex Japan Index and 5.38% for the Lipper Pacific Ex Japan Funds Average. For the 12 months ended June 30, 2014, the fund returned 14.84% versus 16.67% for the MSCI All Country Asia ex Japan Index and 16.19% for the Lipper Pacific Ex Japan Funds Average. The fund's average annual total returns were 14.84%, 13.09%, and 14.82% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.93% as of its fiscal year ended October 31, 2013.
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China, Hong Kong, and South Korea represented the largest absolute positions at quarter-end, with Hong Kong and India accounting for the largest overweight markets. We maintained longstanding underweight allocations to the more developed markets of Taiwan, Singapore, and South Korea, where we see fewer growth opportunities. In India, we hold a mix of blue chip domestic cyclical stocks and export-oriented names. Sector allocations continue to reflect our preference for areas driven by domestic consumption. Consumer discretionary and consumer staples were the largest overweight sectors at the end of June, while financials was the biggest underweight. We avoid holding mainland Chinese banks due to the risk of rising nonperforming loans in China's financial system.
We expect many Asian economies will maintain below-potential growth rates for some time, but, in recent months, we have grown more optimistic in our outlook. For more developed Asian economies, we expect somewhat stronger economic performance than last year, helped by the recoveries in the U.S. and Europe. For the less developed parts of Asia, the picture is mixed. Thailand's political turmoil continues to hurt the economy, and Indonesia's growth remains below potential, but our outlook for the Philippines is more positive. We are encouraged by India's election results but caution that the BJP faces many obstacles as it tries to reform India's vast economy. In China, we believe that the government will manage the slowing economy in the near term, but occasional missteps will trigger periods of volatility in global financial markets. We believe that increased urbanization, rising consumption, and a growing middle class should drive strong and sustainable growth in Asia for many years.