Most major U.S. stock indexes rose in the second quarter. Markets registered moderate but reasonably steady gains in April and May, supported by accommodative monetary policies overseas, stabilizing oil prices, and reduced expectations for interest rate hikes in the U.S. Markets tumbled in late June, however, after the UK surprised investors by voting leave the European Union, or the Brexit scenario. International developed markets stocks declined moderately in U.S. dollar terms. Japanese shares gained slightly as the yen strengthened nearly 10% versus the U.S. dollar, but most European markets declined. UK stocks fell and the sterling lost 7% versus the dollar. Emerging markets stocks rose slightly overall, led by Latin America. The U.S. dollar gained against most major currencies and boosted returns for U.S. investors.
The Spectrum Growth Fund returned 1.11% in the quarter compared with 2.63% for the Russell 3000 Index and 2.18% for the Lipper Multi-Cap Core Funds Index. For the 12 months ended June 30, 2016, the fund returned −2.94% versus 2.14% for the Russell 3000 Index and −0.60% for the Lipper Multi-Cap Core Funds Index. The fund's average annual total returns were −2.94%, 8.20%, and 6.34% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.79% as of its fiscal year ended December 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.
We have a preference for international equities versus U.S. stocks. Relative valuations favor international stocks, and aggressive quantitative easing measures provide support in many developed overseas markets, although we are mindful of the wide disparity in valuations across regions and sectors. However, lower global growth expectations have weighed on the potential for improve earnings growth in key international markets. Among international equities, we currently favor emerging markets equities over international developed markets but took advantage of a recent market rally in emerging markets to reduce the size of our overweight.
We expect global economic growth to be modest and uneven. Developed markets are expanding modestly, while major emerging markets are hampered by weak global growth. The Federal Reserve has adopted a "low and slow" approach to interest rate hikes, and their timing may be further affected as they evaluate Brexit's impact on U.S. and global growth rates. Key risks to global markets include the cascading and uncertain impacts of Brexit and divergent global monetary policies, including the potentially adverse consequences of negative interest rates and currency volatility. Political and policy uncertainties facing many countries pose additional concerns. However, we believe that the broad diversification and our ability to make tactical changes in the fund's allocations should help us generate attractive risk-adjusted returns in an uncertain market environment.