U.S. stocks rose in the first quarter of 2015 despite occasional bouts of risk aversion and volatility and uncertainty about when the Federal Reserve may begin tightening its monetary policy. Mid- and small-cap shares strongly outperformed their larger peers. According to various Russell indexes, growth stocks strongly outperformed value stocks across all market capitalizations. Developed non-U.S. stock markets advanced despite a stronger dollar versus several major currencies. Asian markets outperformed their European peers, with Japanese shares rising 10%. Equities in developing markets underperformed shares in developed non-U.S. markets as weaker emerging markets currencies reduced returns in dollar terms.
The Spectrum Growth Fund returned 3.58% in the quarter compared with 1.80% for the Russell 3000 Index and 2.16% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended March 31, 2015, the fund returned 8.21% versus 12.37% for the Russell 3000 Index and 10.60% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were 8.21%, 12.22%, and 8.12% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.80% 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 Spectrum Growth Fund blends domestic and non-U.S. growth and value funds across the market capitalization spectrum. Diversifying sectors not represented in the benchmark, including developed market non-U.S. equities, contributed to relative performance as many international equity markets outpaced U.S. equities, in both U.S. and local currencies. However, the inclusion of real asset equities weighed on relative performance as falling oil prices and low inflation caused the asset class to lag. Stock selection within the underlying portfolios also contributed to relative performance, particularly within several of the U.S. large-cap portfolios, across both value and growth. Our overweight to U.S. large-caps relative to U.S. small-caps weighed on relative performance. However, our underweight to real asset equities was a contributor. We are overweight to non-U.S. equity as valuations remain modestly more attractive outside the U.S. Within the asset class, we favor emerging markets. Despite weakness across commodity prices, we remain underweight to real assets equities.
Central bank monetary policies should continue to diverge as the U.S. Federal Reserve begins to normalize interest rate policy sometime in 2015, Europe and Japan deepen quantitative easing to spur inflation and growth, and many emerging markets countries lower interest rates. Moderate growth in the U.S. should continue. In developed non-U.S. markets, we expect growth to improve as fiscal headwinds diminish, the credit environment mends, energy costs wane, and the euro weakens. However, growth among emerging markets is likely to decline, weighed down by China's move to a consumer-focused economy and sanction-fueled economic woes in Russia. Against this backdrop, we believe that our highly diversified portfolios and diligent fundamental research can enhance our ability to produce good long-term returns.