Equities in developed non-U.S. markets outperformed their U.S. counterparts as a weaker U.S. dollar versus other major currencies lifted returns to U.S. investors in dollar terms. In Europe, eurozone markets fared best amid signs that the region is emerging from a protracted recession. Markets in peripheral European countries such as Greece and Spain were among the top performers. Developed Asian markets produced milder gains, with Japanese shares rising almost 7%. Emerging markets equities generally appreciated but significantly trailed developed non-U.S. markets. Stocks in emerging European countries were among the top performers. Emerging markets shares in particular experienced considerable volatility.
The Global Growth Stock Fund returned 7.60% in the quarter compared with 7.76% for the MSCI All Country World Index Large Cap. For the 12 months ended September 30, 2013, the fund returned 15.62% versus 17.42% for the MSCI All Country World Index Large Cap.* The fund's 1-year and Since Inception (10/27/2008) average annual total returns were 15.62% and 20.78%, respectively, as of September 30, 2013. The fund's expense ratio was 1.33% as of its fiscal year ended October 31, 2012.
*The fund's benchmark was the MSCI All Country World Index Large Cap Index through 10/31/13. Effective 11/1/13, the new benchmark is the MSCI All Country World Index. The new benchmark is more diversified by country and region than the previous one and is more representative of the fund's investment program and new name.
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 countries like Indonesia and the Philippines. These are 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 are dependent on demand for commodities for economic growth. 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 underweights were in telecommunication services, where companies generally need to make significant investments to provide faster service with limited pricing power, and in materials, where it has been difficult to find good values as a result of slow global growth.
Despite the uncertainty created by the political standoff over fiscal policy, the U.S. economy is getting better, but it's not as healthy as most people seem to think. Europe has stopped getting worse, but it's not getting significantly better. Emerging markets in general are not as unhealthy as many seem to believe, although the currency sell-offs in countries including India and Indonesia earlier in the year have presented more of a headwind to growth than we anticipated. There has recently been a lot of "noise" in macroeconomic factors driving stock prices, but we're confident that markets will eventually return to their normal focus on corporate earnings. We will continue to concentrate on buying high-quality companies selling at reasonable valuations.