Developed non-U.S. stock markets generated strong returns with European markets outperforming most markets in Asia and the Americas largely due to signs of improving economic growth and investor sentiment. Despite several bouts of heightened volatility, Asia's largest markets, China and Japan, returned solid third-quarter results. However, most emerging markets continued to struggle amid concerns about slowing growth, rising interest rates across developed markets, political unrest, and currency weakness. The emerging Europe, Middle East, and Africa region outperformed other emerging markets.
The Spectrum International Fund returned 9.51% in the quarter compared with 10.17% for the MSCI All Country World Index ex USA. For the 12 months ended September 30, 2013, the fund returned 17.97% versus 16.98% for the MSCI All Country World Index ex USA. The fund's average annual total returns were 17.97%, 8.46%, and 9.02% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2013. The fund's expense ratio was 0.96% as of its fiscal year ended December 31, 2012.
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 International 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.
The European Stock Fund, which invests primarily in developed countries, was the best underlying portfolio in the fund and contributed the most to absolute returns, while the New Asia Fund and Emerging Markets Stock Fund were the largest detractors. Our current strategy favors emerging over developed markets, as the former have been challenged of late and now offer attractive valuations. We are modestly overweight to value stocks. Although challenged by the muted economic growth environment, value stocks outside the U.S. are supported by attractive valuations with prospects for improvement as systemic risks abate.
Our global growth expectations remain modest over the next several quarters. Gradual improvement in U.S. economic activity is supported by the housing recovery and moderate job growth, yet hindered by fiscal headwinds that should fade going into year-end provided that the government shutdown and any tangle over the debt ceiling are short-lived. U.S. corporate balance sheets and profit margins remain healthy. Earnings and revenue growth in the low- to mid-single digits are consistent with modest economic growth. European economies are hindered by debt loads but have begun to benefit from a shift in policy to ease back on austerity. Slowing growth in China, Brazil, and other emerging economies is weighing on global trade, but many emerging market economies presently enjoy healthier fiscal budgets and debt loads than their developed counterparts, though there are notable disparities in relative economic strength across the emerging world. Globally, equity valuations are reasonable relative to historical levels based on several measures, including price-to-earnings and price-to-free cash flow. We believe the uneven global outlook and other near-term risks reinforce the value of the fund's broadly diversified investment approach.