Large-cap U.S. stocks generated strong gains in the fourth quarter of 2014, finding support in steady U.S. economic growth and renewed stimulus efforts in the eurozone and Japan. Non-U.S. developed markets stocks declined, due in large part to the further weakening of non-U.S. currencies against the U.S. dollar. Emerging markets equities lagged those from overseas developed markets amid signs of slowing global growth and plunging commodities prices. Returns for global industrials stocks managed a slight gain for the quarter but were flat for the year.
The Global Industrials Fund returned 1.60% in the quarter compared with 1.38% for the MSCI ACWI Index Industrials + Automobiles & Auto Components. For the 12 months ended December 31, 2014, the fund returned −1.33% versus 0.21% 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 −1.33% and 2.20%, respectively, as of December 31, 2014. The fund's expense ratio was 4.01% as of its fiscal year ended December 31, 2013.
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Airlines were our top-performing industry during the quarter. Our portfolio is composed largely of North American carriers, which benefited from the ongoing U.S. economic recovery and industry consolidation that has contributed to improved cost structures and better pricing power. Automobile component suppliers generated positive returns, while auto manufacturers declined overall. We prefer select auto suppliers because we feel they have a better opportunity to outgrow the end market, which has largely fully recovered. Our industrial machinery stocks tumbled, punished by lower expectations for capital spending by the energy industry.
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.