U.S. stocks rose despite occasional bouts of risk aversion and volatility and uncertainty about when the Federal Reserve might increase interest rates. Mid- and small-cap shares outperformed large-caps; growth stocks outperformed value stocks across all market capitalizations. Stocks in developed non-U.S. markets generally outperformed U.S. shares, despite a stronger dollar versus several major currencies. Emerging markets equities edged higher, but weak emerging markets currencies reduced returns in dollar terms. U.S. bonds moved up amid weak inflation readings and decelerating economic growth. Long-term Treasuries climbed as long-term interest rates declined. High yield bonds advanced as energy issuers, an important segment of the market, benefited from stabilizing oil prices. Developed non-U.S. bonds produced negative returns in dollar terms as the dollar grew stronger.
The Personal Strategy Growth Fund returned 3.44% in the quarter compared with 2.25% for the Combined Index Portfolio* and 2.02% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. For the 12 months ended March 31, 2015, the fund returned 8.26% versus 7.92% for the Combined Index Portfolio* and 7.25% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. The fund's average annual total returns were 8.26%, 11.75%, and 7.77% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.90% as of its fiscal year ended May 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.
Security selection was the primary driver of relative performance. Security selection within our U.S. large-cap portfolios contributed as each outperformed their style-specific benchmarks. Our non-U.S. equities portfolios also outperformed their style-specific benchmarks. However, security selection within emerging markets bonds detracted as the portfolio underperformed its style-specific benchmark. The inclusion of non-benchmark diversifying sectors contributed to relative performance, especially our high yield and emerging markets bond portfolios. However, our exposure to non-U.S. dollar bonds and real asset equities weighed on relative performance. Positioning decisions detracted from relative performance, particularly our underweight to U.S. small-cap equities versus U.S. large-caps. However, our underweight to real asset equities contributed to relative performance.
Central bank monetary policies should continue to diverge as the U.S. Federal Reserve begins to normalize interest rate policy sometime in 2015, Europe and Japan deepen quantitative easing to spur inflation and growth, and many emerging markets countries lower interest rates. Moderate growth in the U.S. should continue as the recovery continues. In developed non-U.S. markets, we expect growth to improve as fiscal headwinds diminish, the credit environment mends, energy costs wane, and the euro weakens. However, growth in emerging markets is likely to decline, weighed down by China's move to a consumer-focused economy and sanction-fueled economic woes in Russia. Against this backdrop, we believe that our highly diversified portfolios and diligent fundamental research can enhance our ability to produce good long-term returns.