U.S. stocks gained modestly as monetary stimulus overseas and a slower decline in oil prices overrode concerns about impending U.S. interest rate hikes, a stronger dollar, and mixed domestic economic data. Stocks in Europe and Japan rose amid encouraging signs of economic growth, but the stronger greenback weighed on dollar-based returns. Emerging markets stocks advanced overall, but performance varied between countries as commodity importers generally outpaced commodity exporters. Global industrials stocks advanced with moderate gains, led by automobile and auto-related stocks and building products.
The Global Industrials Fund returned 4.90% in the quarter compared with 3.59% for the MSCI ACWI Index Industrials + Automobiles & Auto Components. For the 12 months ended March 31, 2015, the fund returned 3.40% versus 3.70% for the MSCI ACWI Index Industrials + Automobiles & Auto Components. The fund's 1-year and Since Inception (10/24/2013) average annual total returns were 3.40% and 5.28%, respectively, as of March 31, 2015. The fund's expense ratio was 4.01% as of its fiscal year ended December 31, 2013.
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
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Automobile component suppliers were among our top-performing industries. We prefer select auto suppliers because we feel that they have a better opportunity to outgrow the end market. Our automobile manufacturers also performed well. We have a bias toward Japanese firms, which benefited from a modest rebound in key end markets and a weaker yen. Our airlines gave back some gains after a strong 2014. We favor North American carriers, which benefited from U.S. economic growth and industry consolidation. However, we are mindful that this industry is deeply cyclical, which means that it could fall sharply if the economy takes an unexpected downturn.
We expect modest global economic growth over the next year that will be similar to the levels achieved in 2014. Led by the U.S., developed markets growth rates continue to plod along and emerging markets continue to grow at a decelerating rate. Lower oil prices over the near term are likely to weigh on business capital expenditures, which will pressure revenues for global industrials firms over the coming months. Once that cycle has passed, however, we expect low energy prices to provide a boost to consumer spending, which should eventually provide a tailwind for industrials stocks.