Large-cap U.S. stocks posted nearly flat performance in the first quarter, outperforming mid-caps but lagging the returns of small-cap companies. There was little difference in the returns of value and growth stocks within the U.S. large-cap universe. Later in the quarter, enthusiasm about a reaccelerating U.S. economy gave way to worries about the ongoing Greek debt crisis and heightened volatility in China. Stocks in developed non-U.S. markets narrowly outperformed U.S. shares to post modestly positive returns. Within the broad MSCI Europe, Australasia, and Far East Index, large-caps lagged small-caps and growth outperformed value. In emerging markets, stocks in Latin America and the Europe, Middle East, and Africa region recorded solid gains, but Asian developing markets lost ground.
The Global Stock Fund returned 1.23% in the quarter compared with 0.52% for the MSCI All Country World Index and 0.76% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended June 30, 2015, the fund returned 7.15% versus 1.23% for the MSCI All Country World Index and 3.18% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were 7.15%, 14.22%, and 7.56% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.89% as of its fiscal year ended October 31, 2014.
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 Global Stock 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.
Bottom-up stock selection drives all of our allocation shifts. We reduced our allocation to the industrials and business services sector, primarily as a result of significantly decreasing our exposure to the airlines industry, where we think added capacity will cut into profits. We increased our holdings of consumer discretionary companies, focusing on firms that generate a significant portion of their revenue in euros. In our view, many of these stocks were disproportionately punished as a result of the euro's weakness earlier in the year. Although select U.S. financial firms enjoyed solid gains in the second quarter, we believe that they will benefit from higher interest rates and are well positioned for strong performance, even amid an uptick in volatility as the market prepares for the Federal Reserve to start raising rates.
We believe that deleveraging cycles around the world are coming to an end, although at different speeds in various developed markets. This will ultimately lead to an end of the long-running environment of low interest rates and below-average economic growth. With the Fed preparing to raise rates, we are confident that the transition to normalized monetary policy will create some volatility and opportunities to own mispriced companies. We continue to build the portfolio from the bottom up, seeking stocks where return on capital is poised to increase as a result of improving industry structure, secular demand growth, or company-specific drivers, while maintaining a disciplined view toward risk.