Non-U.S. developed markets stocks capped a strong year with robust returns in the fourth quarter of 2013. European stocks registered good gains, benefiting from a central bank rate cut, reduced emphasis on austerity measures, progress on structural reforms in some countries, and signs that the region's recession had ended. Japanese stocks performed well for the year as the country's economy edged further toward recovery amid accommodative monetary policies and other economic stimulus measures, but gains were relatively modest in the fourth quarter. Performance among emerging markets was mixed as Asian markets generally advanced and Latin American shares declined
The Overseas Stock Fund returned 6.69% in the quarter compared with 5.75% for the MSCI EAFE Index and 5.45% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended December 31, 2013, the fund returned 21.75% versus 23.29% for the MSCI EAFE Index and 19.98% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 21.75%, 14.42%, and 2.38% for the 1-, 5-, and Since Inception (12/29/2006) periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.87% 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 Overseas Stock 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.
Performance was positive across all sectors, with telecommunication services, health care, and financials posting the biggest gains. Consumer staples and utilities advanced modestly. Consumer discretionary remains our largest overweight position, but we have been trimming our exposure to stocks where valuations appear to have outstripped fundamentals. From a regional perspective, we remain focused on Europe, particularly in the UK, Germany, Switzerland, and France, as growth prospects have brightened. Japan is our second-largest allocation amid signs of growth after a long period of decline. The Pacific Rim accounts for a significant portion of the portfolio, but we have only a slight exposure to Latin America.
Valuations for non-U.S. developed markets stocks remain reasonable despite their recent strength. Europe appears to be on the road to economic recovery, while growth-oriented policies have provided a positive jolt to Japan's economy. However, policymakers in Europe, and particularly in Japan, must still address fiscal imbalances and important structural reforms. Emerging markets offer compelling valuations after recent underperformance, but prospects are mixed between countries due to divergent fundamentals. Our focus is on fundamental research and bottom-up stock selection, seeking companies that can generate the best risk-adjusted returns wherever we can find them.