As of May 16, 2014, Global Infrastructure Fund merged into the Real Assets Fund, and existing account balances were transferred over. Real assets stocks posted strong overall gains for the quarter, driven by positive performance in all underlying subsectors. Precious metals extended their first-quarter rebound from a prolonged slide, helped by falling U.S. interest rates and heightened geopolitical tensions in the Middle East and Eastern Europe. Energy shares rose as sectarian violence in Iraq drove prices higher and investors became more comfortable with the staying power of the global economic recovery. Real estate stocks provided good returns during the quarter, with global REITs performing particularly well. The domestic lodging segment was strong, advancing to catch up with other industries after a muted first quarter.
The Global Infrastructure Fund returned 4.92% in the quarter compared with 6.78% for the UBS World Infrastructure & Utilities Index and 3.58% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended March 31, 2014, the fund returned 12.03% versus 13.80% for the UBS World Infrastructure & Utilities Index and 7.20% for the Lipper Specialty/Miscellaneous Funds Average. The fund's 1-year and Since Inception (01/27/2010) average annual total returns were 12.03% and 8.22%, respectively, as of March 31, 2014. The fund's expense ratio was 1.68% as of its fiscal year ended October 31, 2013.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
The Global Infrastructure 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.
In anticipation of the recent merger, which was completed in mid-May, we reduced exposure to riskier holdings. We realized good gains in the financials and energy sectors, followed by utilities, while telecommunications services performed worst. Within the Real Assets Fund, natural resources stocks represent the largest absolute position and largest overweight versus our benchmark. U.S. oil and gas exploration and production companies generated strong double-digit gains, as did shares in the related oil and gas storage and transportation industry. Stock selection in shopping center REITs, regional malls, and office properties contributed positively to fund performance. Favorable trends in employment have provided a boost to our office holdings.
We expect modest global economic growth over the next few quarters. Improved housing and labor markets, muted energy prices, and diminished fiscal headwinds support the ongoing U.S. recovery. Europe's shallow recovery should continue, and stimulative policies have boosted Japan's economy, but the sustainability of both will depend on more challenging structural reforms. Many emerging markets remain vulnerable to rising U.S. interest rates. Modest global growth is likely to weigh on energy and materials demand over the long term, while increased production capacity has increased supplies. Fundamentals on REITs are favorable, yet valuations remain rich. Even if the near-term environment presents challenges, we believe the market will reward our disciplined and consistent approach to investing over the long term.