Stocks in most developed markets surged in the fourth quarter after the U.S. Federal Reserve unexpectedly announced that it would not begin tapering its asset purchases in mid-September. Subsequently, the European Central Bank cut its key lending rate by 0.25 percentage points in November, signaling that inflation was not a problem and growth was a priority, which helped extend the broad-based international stock market rally through the end of the year. Finally, the Fed's mid-December announcement that it would gradually wind down its large-scale asset purchases beginning in January 2014 cheered investors as it removed an element of uncertainty. Conditions in emerging economies were mixed, with many opting for tighter monetary policies to bolster their currencies and contain inflation. Stocks in emerging Asian markets advanced, while emerging European and Latin American equities declined.
The Global Growth Stock Fund returned 7.53% in the quarter compared with 7.42% for the MSCI All Country World Index and 8.04% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended December 31, 2013, the fund returned 20.11% versus 23.44% for the MSCI All Country World Index and 26.58% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were 20.11%, 17.59%, and 21.37% for the 1-, 5-, and Since Inception (10/27/2008) periods, respectively, as of December 31, 2013. The fund's expense ratio was 1.33% as of its fiscal year ended October 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 Global Growth 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.
We continue to hold an overweight allocation to emerging markets, where we focus on owning well-run companies in nations whose governments are making structural improvements that should position them for growth. We have reduced our exposure to emerging countries such as Brazil that have had a more difficult time undertaking needed reforms. Rigorous stock-specific analysis and selectivity is essential regardless of the market. Although our overarching philosophy is to be generally sector neutral versus the benchmark, our bottom-up fundamental analysis of stocks can result in some overweights or underweights. Two of the fund's notable overweights were in the information technology and consumer staples sectors.
As a result of the 2013 surge in developed stock markets, higher valuations now temper our near-term outlook for developed-market equities. However, despite Europe's modest economic prospects, the risk/reward ratio there appears more attractive than in most other developed markets. On the other hand, we believe that emerging markets offer compelling valuations, given their recent underperformance and strong long-term growth prospects as well as their low debt-to-GDP ratios relative to developed economies. China appears to have achieved a soft economic landing, and the country features a number of attractive opportunities. Our outlook is more guarded in other key markets, including Brazil and India, where inflation remains a concern and reforms are needed. We're confident that markets will eventually return to their normal focus on corporate earnings, and we will continue to concentrate on buying high-quality companies selling at reasonable valuations.