U.S. stocks rose in the third quarter, extending this year's impressive rally, despite moderating corporate fundamentals. The market also overcame an increase in long-term interest rates, which was driven by expectations that the Federal Reserve would begin reducing its asset purchases after its September 17-18 monetary policy meeting. However, the Fed surprisingly decided to delay action. On its heels, an October federal government shutdown loomed along as another debt ceiling showdown appeared likely. In Europe, eurozone markets fared best amid signs that the region is emerging from a protracted recession. Markets in peripheral countries such as Greece, Spain, and Italy were among the top performers. Developed Asian markets produced milder gains as emerging Asian economies continued to decelerate. Emerging equity markets produced moderate gains but significantly trailed developed non-U.S. equity markets. Within the UBS World Infrastructure & Utilities Index, developed Europe performed best, while North America was the biggest laggard.
The Global Infrastructure Fund returned 4.54% in the quarter compared with 5.23% for the UBS World Infrastructure & Utilities Index and 1.37% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended September 30, 2013, the fund returned 12.48% versus 11.49% for the UBS World Infrastructure & Utilities Index and 5.56% for the Lipper Specialty/Miscellaneous Funds Average. The fund's 1-year and Since Inception (01/27/2010) average annual total returns were 12.48% and 6.70%, respectively, as of September 30, 2013. The fund's expense ratio was 1.81% as of its fiscal year ended October 31, 2012.
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The portfolio remains cautious in terms of its exposure to continental European utilities. However, valuations in regulated names have become more attractive in both Europe and the U.S., where we are adding selectively. We have observed positive trends in European Purchasing Managers' Indexes, which should lead to increased transportation demand. We remain optimistic on European infrastructure through exposure to firms operating toll road and airport operators. We also expect positive growth momentum in China over the near term, driven by improvement in infrastructure spending, real estate construction activities, and improving exports. Overall, the strategy continues to strike a balance between infrastructure and utilities and maintains a healthy exposure to emerging markets.
Our global growth expectations remain modest over the next several quarters. Gradual improvement in U.S. economic activity is supported by the housing recovery and moderate job growth yet hindered by fiscal headwinds that should fade going into year-end, provided that the government shutdown and any tangles over the debt limit are short-lived. European economies are hindered by debt loads but have begun to benefit from a shift in policy to ease back on austerity. Slowing growth in China, Brazil, and other emerging economies is weighing on global trade. Nevertheless, we are confident that emerging market stocks are an attractive asset class over the medium to longer term. Most emerging markets have implemented sensible macroeconomic policies with encouraging results. As always, we are focused on bottom-up stock selection and currently favor companies that generate stable growth and solid cash flow.