Most developed markets, especially the U.S. and Japan, posted solid first-quarter gains. Japan moved aggressively to debase its currency in an effort to reignite growth. The U.S. economy gained traction, and markets reached multiyear highs as a result of improving corporate prospects and highly accommodative Federal Reserve monetary policies. The eurozone crisis eased somewhat due to improved credit conditions engineered by the European Central Bank. In contrast, emerging markets were broadly lower due to concerns about slowing growth and on currency weakness.
The Global Large-Cap Stock Fund returned 5.90% in the quarter compared with 6.35% for the MSCI All Country World Index Large Cap and 6.52% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended March 31, 2013, the fund returned 10.69% versus 10.95% for the MSCI All Country World Index Large Cap and 8.00% for the Lipper Global Multi-Cap Growth Funds Average. The fund's 1-year and Since Inception (10/27/2008) average annual total returns were 10.69% and 21.92%, respectively, as of March 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 Large-Cap 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.
Benchmark Definitions
We continue to hold a large allocation to emerging markets, particularly among many of the smaller economies, where we see bright prospects for growth. A number of these markets, including the Philippines, Indonesia, Malaysia, Peru, Chile, and Turkey, are witnessing increasing consumer demand and are less reliant on slowing Chinese demand. However, we increased our exposure to China due to favorable valuations. We also increased our holdings in developed market banks on improving policy actions and an acceleration in the housing recovery. We added to our consumer discretionary allocation due to attractive valuations but remain cautious in the sector amid modest economic growth. The portfolio's significant underweight in energy versus its benchmark reflects our concerns about weakening demand and robust supply.
The strength of global markets appears to be a result of the search for returns in a low-yield environment and favorable monetary policies in Japan, Europe, and the U.S. Corporate profits have been promising, but we are mindful that consumer spending, particularly, in developed markets, is muted and could affect market performance. We believe stock selection is critical in this environment and are focused on buying high-quality companies with growing franchises, strong cash flow, and solid balance sheets that should prosper during the next phase of the economic cycle.
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