U.S. stocks posted solid first-quarter returns, although large-cap equities notably underperformed small- and mid-cap companies. Large-cap stocks tend to generate more of their revenues from foreign markets, exposing them more to a stronger dollar that reduces the value of their income from outside the U.S. Across all market capitalizations, growth stocks performed better than value. Non-U.S. developed market stocks generated gains for U.S.-based investors even after accounting for the marked strengthening in the dollar. Within the broad MSCI Europe, Australasia, and Far East Index, large- and small-cap stocks performed similarly, while growth equities outpaced value. In general, emerging markets lagged the returns of non-U.S. developed markets.
The Global Stock Fund returned 5.33% in the quarter compared with 2.44% for the MSCI All Country World Index and 3.50% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended March 31, 2015, the fund returned 10.11% versus 5.97% for the MSCI All Country World Index and 5.72% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were 10.11%, 10.66%, and 8.03% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.89% 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 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.
The fund's regional allocations were little changed in the first quarter. Bottom-up stock selection drives all of our allocation shifts. We stopped adding to eurozone exposure as valuations there climbed and marginally reduced our emerging markets holdings because industry structures in developed markets appear more conducive to corporate earnings strength than in developing countries. We are finding attractive investment opportunities in financial stocks whose prices have not followed the broad market higher. This is particularly true for large U.S. financial firms that should benefit from higher interest rates.
We think that the U.S. could experience a positive economic transition later in 2015, moving from a still-tentative rebound to a position of strength that includes a housing market rebound and more normal inflation levels. The economic situation in the eurozone has clearly stopped getting worse, thanks largely to the European Central Bank's aggressive expansion of its quantitative easing program to include sovereign debt. In this environment, we believe that strategies based primarily on regional allocations have limited room to add value. As a result, we continue to build the portfolio from the bottom up, seeking stocks where return on capital is poised to improve as a result of improving industry structure, secular demand growth, or company-specific drivers while maintaining a disciplined view toward risk.