Non-U.S. developed markets declined modestly in the quarter, although performance was mixed. Higher oil prices helped energy lead returns, and defensive segments also did well. Cyclical sectors, such as consumer discretionary and financials, lagged.
The International Growth & Income Fund returned −2.01% in the quarter compared with −1.19% for the MSCI EAFE Index and −1.86% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended June 30, 2016, the fund returned −12.17% versus −9.72% for the MSCI EAFE Index and −12.25% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were −12.17%, 0.94%, and 1.56% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.84% as of its fiscal year ended October 31, 2015.
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 International Value Equity 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.
The portfolio is overweight in the UK, which was a headwind to results following the Brexit vote. We are not making wholesale changes to our holdings, however, since many of our positions are global businesses that we feel have been unfairly punished in the sell-off. Our regional allocations are mainly a result of our bottom-up stock selection but are also influenced by our assessment of macroeconomic prospects. Although the fund invests primarily in developed market countries, it also maintains exposure to emerging markets. Our direct exposure to emerging markets increased modestly during the quarter.
Our positioning remains broadly defensive, but we have been buying stocks with more cyclical exposure while keeping an eye on solid balance sheets, good operational leverage, and low valuations. Overall, valuations remain broadly reasonable, but the high-quality growth companies that are not our focus are priced at a premium. We believe effective stock picking will be more important than ever in this environment.