Large-cap U.S. stocks posted nearly flat performance in the first quarter, outperforming mid-caps but lagging the returns of small-cap companies. There was little difference in the returns of value and growth stocks within the U.S. large-cap universe. Later in the quarter, enthusiasm about a reaccelerating U.S. economy gave way to worries about the ongoing Greek debt crisis and heightened volatility in China. Stocks in developed non-U.S. markets narrowly outperformed U.S. shares to post modestly positive returns. Within the broad MSCI Europe, Australasia, and Far East Index, large-caps lagged small-caps, and growth outperformed value. In emerging markets, stocks in Latin America and the Europe, Middle East, and Africa region recorded solid gains, but Asian developing markets lost ground.
The Global Growth Stock Fund returned −0.05% in the quarter compared with 0.52% for the MSCI All Country World Index and 0.76% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended June 30, 2015, the fund returned 5.70% versus 1.23% for the MSCI All Country World Index and 3.18% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were 5.70%, 13.52%, and 18.50% for the 1-, 5-, and Since Inception (10/27/2008) periods, respectively, as of June 30, 2015. The fund's expense ratio was 1.16% as of its fiscal year ended October 31, 2014.
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.
The portfolio has a large overweight allocation to emerging markets, which represent about one-quarter of total net assets. We have been finding more companies that can substantially increase their earnings in developing countries than in developed markets. We are underweight the U.S., where valuations are elevated, and Japan, where we think that poor corporate governance and slowness in implementing structural reforms will restrain returns. Although our overarching philosophy is to be sector-neutral versus the benchmark, our bottom-up fundamental analysis of stocks can result in some overweights or underweights. We reduced our allocation to the industrials and business services sector, primarily as a result of trimming exposure to the airline industry. However, the portfolio remained overweight the sector relative to the benchmark.
We think that the U.S. economy will continue to expand at a modest pace, prompting the Federal Reserve to raise interest rates primarily to move away from the near-zero rates that have prevailed since the global financial crisis. The current boom in mergers and acquisitions is a sign that the economy is heating up, but we don't anticipate a sharp increase in economic growth. In general, U.S. stock valuations appear less attractive than equities in other regions. We think that there is more room for economic growth and for companies to increase their earnings in Europe and in emerging markets than in the U.S. We will continue to concentrate on buying high-quality companies selling at reasonable valuations regardless of where they are based.