Major U.S. equity indexes were mixed in the first quarter of 2016, as sharp gains in the second half of the period erased earlier losses. Global markets weakened in January amid concerns about slowing growth in China and other key markets, and oil prices plunged below $30 per barrel. From mid-February, equities rallied sharply through the end of March, as the Bank of Japan and the European Central Bank unveiled expanded stimulus efforts. Oil prices bounced off 12-year lows amid speculation that OPEC producers would freeze or cut production at an April 17 meeting. Combined with renewed stimulus efforts in China, these factors supported a rebound in prices for a number of commodities in the period's closing weeks. Performance among global real estate stocks was mixed, although the majority of countries turned in positive absolute returns.
The Real Assets Fund returned 9.72% in the quarter compared with 0.38% for the MSCI All Country World Index and −1.35% for the Lipper Specialty/Miscellaneous Funds Average. For the 12 months ended March 31, 2016, the fund returned −7.34% versus −3.81% for the MSCI All Country World Index and −13.38% for the Lipper Specialty/Miscellaneous Funds Average. The fund's average annual total returns were −7.34%, −2.85%, and 1.73% for the 1-, 5-, and Since Inception (07/28/2010) periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.83% as of its fiscal year ended December 31, 2015.
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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 Real Assets 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.
Our real assets equity portfolio generated strong returns for the period, with every sub-asset class finishing in positive territory. Precious metals equities generated exceptional double-digit gains as investors turned to the asset class amid elevated currency and economic uncertainty. Our industrial metals and natural resources stocks also registered strong gains amid optimism about renewed stimulus efforts in China, Europe, and Japan. U.S. and international real estate investment trusts posted lesser gains but still outperformed the broader equities market. The U.S. leasing pipelines remain active, and occupancy rates and rents are increasing in many markets across a range of property types. We are optimistic that our Japanese real estate stocks are positioned to benefit from economic recovery and a reversal of deflationary pressures.
Prices for global energy and commodities have fallen considerably as improved extraction technologies and increased production have raised supplies while slower global economic growth and trade has dampened demand. Uncertainty is likely to persist within commodity-related sectors as companies reduce payrolls, cut capital spending, and divest assets to protect their balance sheets and meet their debt obligations. Fundamentals for developed markets real estate remain broadly positive, supported by modest economic growth and limited supply. Although REIT valuations are modestly above broader equities and they remain sensitive to rising interest rates, the Fed's gradual pace in normalizing its interest rate policy could soften the risk.