U.S. stocks posted decent gains in a volatile first quarter. Shares fell in January as the Federal Reserve began to taper its asset purchases but rebounded in February amid favorable U.S. economic data and good corporate earnings. Equities fell in March due to geopolitical tensions in Ukraine and signs of a slowdown in China. Non-U.S. developed markets stocks registered more modest gains, while emerging markets equities declined slightly. Natural resources stocks outpaced the broader U.S. and global equity markets for the period. Construction materials and utilities stocks generated the best returns, and precious metals shares also performed well. Industrial metals and mining and coal were among the weaker industries.
The New Era Fund returned 3.06% in the quarter compared with 1.81% for the S&P 500 Index and 2.97% for the Lipper Global Natural Resources Funds Index. For the 12 months ended March 31, 2014, the fund returned 11.87% versus 21.86% for the S&P 500 Index and 12.16% for the Lipper Global Natural Resources Funds Index. The fund's average annual total returns were 11.87%, 14.75%, and 9.65% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.67% as of its fiscal year ended December 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.
North American petroleum exploration and production (E&P) companies were among our strongest performers amid the ongoing U.S. economic recovery and continuing optimism about the prospects for domestic shale oil production. Exposure to non-U.S. E&P stocks and large integrated oil and gas companies weighed on performance. In terms of positioning, we are focused on energy exploration and production companies with decreasing costs and accelerating production growth, particularly North American shale producers. We are also looking at commodity-related companies whose input costs are declining while product sales are increasing, including utilities, and specialty chemicals. The significant increase in North American oil and gas supply needs to find a home in domestic and international markets. As a result, pipelines, railroads, and even barges will be key beneficiaries of North American energy supply growth.
The medium term is likely to remain challenging for natural resources shares, but with wide variation among industries and companies. Overall, we believe that we are in the initial years of a long-term down-cycle in commodities as prospects for modest global economic growth and new supplies weigh on pricing. Higher energy production, particularly in North America, has increased supply, while demand for commodities is expected to remain subdued as China shifts its growth model away from industrial production and exports toward domestic consumption. Within this challenging environment, however, short-term volatility could give commodity and energy prices a boost and offer new investment opportunities.