Developed market international equities posted a good gain in the fourth quarter, thanks to a strong October rally that outweighed losses in November and December. Volatility was the distinguishing characteristic in the quarter as conflicting economic data, diverging monetary policies, and varying degrees of stimulus programs across the globe prompted some investors to jump in the market while others waited on the sidelines for stronger signs of recovery.
The International Growth & Income Fund returned 2.13% in the quarter compared with 4.75% for the MSCI EAFE Index and 3.03% for the Lipper International Multi-Cap Value Funds Average. For the 12 months ended December 31, 2015, the fund returned −3.13% versus −0.39% for the MSCI EAFE Index and −3.31% for the Lipper International Multi-Cap Value Funds Average. The fund's average annual total returns were −3.13%, 3.02%, and 2.98% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.85% as of its fiscal year ended October 31, 2014.
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 Growth & Income 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 construct the portfolio from the bottom up, leveraging our global research platform to uncover undervalued stocks regardless of sector, region, or country. Although we invest primarily in developed market countries, we also maintain modest exposure to emerging markets. Industrials appear rich from a broad valuation perspective, but we have found select names where temporary challenges are obscuring long-term growth potential and are priced at attractive levels. Energy and materials companies have become more interesting as oil and commodity markets approach cash cost levels. We are more likely to add to energy than materials as we see greater visibility for supply correction. For now, however, we remain underweight in both of the challenged sectors.
International developed equity market valuations are generally at more interesting levels than they were three months ago, when they appeared broadly full. Europe continues to recover, and valuations have come down a bit. The market is pricing in continued improvement, however, and many areas of the market there do not appear enticing. Our view on Japan has not changed materially, as gradual progress on structural reforms continues. Emerging market valuations appear cheap but having a full understanding of the impacts of currency moves is going to be critical. We remain cautious about increasing our direct exposure to emerging markets until we see increased stability in emerging market currencies. In the meantime, we maintain some exposure through our investments in developed market companies serving emerging market consumers and businesses.