U.S. equities rose strongly in the first quarter, overcoming fiscal uncertainty and eurozone instability. Stocks advanced as the economic recovery ground forward, buoyed by accommodative monetary policies and improvements in the housing and employment markets. Equities in non-U.S. developed markets posted more modest gains, while emerging markets stocks declined slightly amid concerns about weaker growth, lower commodity prices, and higher inflation. Natural resources stocks were solidly positive overall but trailed the broader equity markets. Many oil-related stocks posted strong gains, while forest products fared well as the U.S. housing market showed signs of recovery. Precious metals stocks fell sharply amid ongoing operational challenges in key production areas and an unfavorable policy environment. Industrial metals also fell as a periodic inventory restocking cycle wound down.
The New Era Fund returned 6.61% in the quarter compared with 10.61% for the S&P 500 Index and 3.76% for the Lipper Global Natural Resources Funds Index. For the 12 months ended March 31, 2013, the fund returned 4.59% versus 13.96% for the S&P 500 Index and −0.36% for the Lipper Global Natural Resources Funds Index. The fund's average annual total returns were 4.59%, −2.33%, and 12.43% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2013. The fund's expense ratio was 0.67% as of its fiscal year ended December 31, 2011.
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Benchmark Definitions
We remain positive on the longer-term, favorable cycle for resource investing, despite recent volatility. We favor quality oil producers, oil and gas equipment and service firms, and other names that stand to benefit from rising future oil demand and currently tight petroleum supply/demand fundamentals. We are focused on natural gas producers with low-cost resource positions that can grow production. Declining rig counts in some of the better-proven shale deposits could provide modest tailwinds on liquid natural gas pricing. While base metals are largely dependent upon the sustainability of China's demand growth, we believe the region's growing middle class will be a long-term driver for the industry. These same trends lead us to favor agricultural names that factor into improving dietary habits in emerging economies.
We expect modest global economic growth in 2013. We would have to see improvement in global growth expectations to become more sanguine, but the path to slow and steady improvement continues even as market volatility may remain high amid ongoing uncertainties. We are encouraged by positive trends in U.S. economic data, and we are optimistic that the policymakers in Washington will begin to address the nation's profound fiscal challenges. China appears to be managing a transition to slower but still robust economic growth. Since the macroeconomic environment and economic policies remain uncertain, we remain focused on assembling a portfolio that we believe can do reasonably well under varying market and economic conditions.
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