U.S. stocks surged as the recovery picked up and fears about a banking sector collapse in Cyprus abated. Rising corporate earnings and the Federal Reserve's ongoing efforts to stimulate growth through its asset purchase plan helped drive the rally, offsetting concerns about the latest flare-up of the eurozone debt crisis in Cyprus. Non-U.S. stocks lagged U.S. shares as a stronger dollar versus other currencies reduced returns in dollar terms. Developed Asian markets fared best, led by Japan, where a new government has promised a more aggressive approach to monetary policy. Eurozone markets were mixed in dollar terms, as developments in Italy and Cyprus weighed on the euro and some stock markets. Emerging markets stocks declined as investors favored developed markets, where the growth outlook has lately improved in contrast to slowing growth in China, Brazil, and other key markets.
The Spectrum Growth Fund returned 7.53% in the quarter compared with 11.07% for the Russell 3000 Index and 10.74% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended March 31, 2013, the fund returned 11.13% versus 14.56% for the Russell 3000 Index and 14.19% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 11.13%, 5.66%, and 10.25% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2013. The fund's expense ratio was 0.80% as of its fiscal year ended December 31, 2011.
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The Spectrum Growth Fund focuses on growth-oriented domestic and non-U.S. stocks across the capitalization spectrum but also includes exposure to value stocks. Allocations to non-U.S. stock funds detracted from relative returns, as most overseas stock markets lagged U.S. stocks for the quarter. Additionally, a few underlying domestic funds such as Growth Stock Fund and Blue Chip Growth Fund trailed their respective benchmarks, which further hurt relative performance. Our current strategy is neutral between U.S. and non-U.S. equity markets, but we favor emerging over developed markets. Recent indicators show emerging markets growth is stabilizing after slowing during much of 2012. Many emerging economies face lighter debt and fiscal problems than developed countries. However, weak global growth may challenge the more export-driven economies, while rising inflation may constrain accommodative monetary policies in many emerging markets.
Our global growth expectations remain modest for the next several quarters. The housing recovery, moderate job growth, and an uptick in personal income growth are supporting gradual improvement in the U.S. economy, but the ongoing fiscal policy debate and its effect on growth remains uncertain. Much of Europe continues to struggle with austerity and recession. The Cyprus bank rescue highlights the continuing challenges in the eurozone debt crisis and the market's susceptibility to them. On the positive side, U.S. corporate balance sheets and profit margins remain healthy, and earnings and revenue growth are consistent with modest economic growth. China's economic growth has slowed from higher levels, but signs of improving data have materialized. We believe the uneven global outlook and other near-term risks reinforce the value of the fund's broadly diversified investment approach.