U.S. stocks recorded stellar gains in the fourth quarter as major indexes set record highs on improving economic growth and strong corporate profits despite sluggish consumer spending. The Federal Reserve helped boost sentiment when it decided to taper its asset purchases beginning January 2014, while Europe's central bank cut its key lending rate in November. Non-U.S. developed markets stocks generally lagged U.S. shares, with eurozone markets faring best. Developed Asian markets were lackluster. Emerging markets lagged developed non-U.S. markets with Asian countries leading. Emerging Europe produced modest gains while Latin America mostly declined. Within the UBS World Infrastructure & Utilities Index, developed Europe was again the best performer while Japan was the biggest laggard.
The Global Infrastructure Fund returned 4.41% in the quarter compared with 2.89% for the UBS World Infrastructure & Utilities Index and 2.20% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended December 31, 2013, the fund returned 14.13% versus 13.75% for the UBS World Infrastructure & Utilities Index and 7.16% for the Lipper Specialty/Miscellaneous Funds Average. The fund's 1-year and Since Inception (01/27/2010) average annual total returns were 14.13% and 7.44%, respectively, as of December 31, 2013. The fund's expense ratio was 1.81% 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 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.
We favor infrastructure assets in North America over utilities, which we believe have less attractive valuations. We continue to like railroads in Japan and are looking at companies in the renewable space in China. Overall, the strategy continues to strike a balance between utilities and infrastructure, where we seek companies poised to benefit from economic recovery in their respective regions, along with dividend growers. The portfolio remains broadly diversified across major industries and regions, with a healthy exposure to emerging markets. (Diversification cannot assure a profit or protect against loss in a declining market.)
Our expectations for global growth remain modest. The U.S. economic recovery continues, supported by accommodative monetary policy and moderate inflation, both of which serve as tailwinds for infrastructure assets. While the eurozone has emerged from recession, economic headwinds continue, and Japan's government will continue to face challenges as it seeks reforms to bolster the country's economy. Emerging markets economies face slower growth than in recent years and remain vulnerable to potential rising U.S. rates. As always, we will continue to leverage our independent global research platform and favor bottom-up stock selection to uncover unique opportunities.