Global equities recorded small gains in the second quarter, although the end of the period was characterized by extreme volatility due to the United Kingdom's vote to leave the European Union (EU), also known as Brexit. Developed European markets generally declined in the second quarter, most notably Austria, Ireland, and Italy. In Japan, the stronger yen helped deliver gains to U.S. dollar investors, but in local currency terms, Japanese equities sold off. Emerging markets stocks were mixed.
The Global Stock Fund returned 1.90% in the quarter compared with 1.19% for the MSCI All Country World Index and 0.70% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended June 30, 2016, the fund returned −1.00% versus −3.17% for the MSCI All Country World Index and −5.29% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were −1.00%, 8.45%, and 5.05% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.89% 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 Global 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.
We reduced our exposure to interest rate-sensitive financials in light of increased uncertainty in the sector. While we trimmed our exposure to industrials and business services, we remain overweight as we believe industry consolidation and significant potential for increased residential and commercial construction in the U.S. will benefit the sector. We have been underweight the energy sector and have been trimming our exposure further due to our belief that U.S. energy inventories will increase in the second half of the year and that oversupply will persist. We have some concerns that consumer staples have become broadly expensive as investors have flocked to higher-yielding stocks in recent years, and we have added the most to consumer discretionary because of the tremendous amount of innovation and change happening in the space.
We do not expect a quick resolution to the UK's decision to leave the EU, and markets are likely to remain volatile in the near term given the many potential political and economic paths that could emerge. In the U.S., continued subdued economic growth, driven by consumer spending, should be supportive for equities, although the presidential election uncertainty, much like what occurred with Brexit, could trigger volatility. In Japan, we continue to see only selective equity opportunities, reflecting persistently sluggish growth and stubborn deflationary pressures. Overall, we think our emerging market holding have a little more tailwind in the short term, with U.S. rates unlikely to rise in the near term.