Most of the major U.S. stock indexes recorded modest gains in the quarter as investors balanced favorable corporate earnings against economic and geopolitical concerns. U.S. value stocks handily outperformed growth shares for the quarter. Non-U.S. developed market stocks endured a tumultuous first quarter, generating mixed results in March after falling in January and rising in February. Emerging markets equities began the year with losses in January and February and then posted solid gains in March, but ended the quarter modestly lower.
The Global Growth Stock Fund returned 1.80% in the quarter compared with 1.21% for the MSCI All Country World Index and 0.36% for the Lipper Global Multi-Cap Growth Funds Average. For the 12 months ended March 31, 2014, the fund returned 15.46% versus 17.17% for the MSCI All Country World Index and 18.98% for the Lipper Global Multi-Cap Growth Funds Average. The fund's average annual total returns were 15.46%, 19.12%, and 20.70% for the 1-, 5-, and Since Inception (10/27/2008) periods, respectively, as of March 31, 2014. The fund's expense ratio was 1.18% as of its fiscal year ended October 31, 2013.
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 Growth 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.
At the end of the quarter, we were underweight to the U.S. (46% of assets) and overweight to emerging markets (24%), where we focus on owning well-run companies in nations whose governments are making structural improvements that should position them for growth. There was much more differentiation in returns between countries in the quarter than there was in 2013, which indicates that investors have stopped indiscriminately selling all emerging markets regardless of fundamentals. Although our overarching philosophy is to be sector-neutral versus the benchmark, our bottom-up fundamental analysis of stocks can result in some overweights or underweights. Two of the fund's notable overweights were in the financials and industrials and business services sectors.
Primarily as a result of the 2013 surge in mature markets, higher valuations have tempered our near-term outlook for developed-market equities. We are wary of lower-quality European companies in general because of the high unemployment and indifferent political decision-making in Europe. We think that the U.S. economy is improving but still not growing vigorously. On the other hand, we believe that emerging markets offer compelling valuations, given their underperformance last year and strong long-term growth prospects. We're confident that markets are returning to their normal focus on corporate earnings, and we will continue to concentrate on buying high-quality companies selling at reasonable valuations.