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 Growth Stock Fund returned 0.43% 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 −3.79% 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 −3.79%, 6.74%, and 15.32% for the 1-, 5-, and Since Inception (10/27/2008) periods, respectively, as of June 30, 2016. The fund's expense ratio was 1.15% as of its fiscal year ended October 31, 2015.
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Our positioning at the sector level remains mostly neutral, but we remain overweight financials, an economically sensitive sector, as a counterbalance to our limited exposure to materials and energy. However, as it became clearer that we would be in a lower-growth, lower interest rate environment for longer, we trimmed our exposure to financials during the quarter. We added to our consumer staples holdings, investing in companies that are growing earnings and revenue while paying attractive dividends. Within health care, we trimmed our exposure to managed care companies. Given the ongoing monetary policy in Japan and the EU, we have maintained small hedges for the U.S. dollar, as we believe that depreciation of these local currencies is likely to impair the benefits we may get from investing in domestically oriented businesses in those currency regions.
Uncertainty remains high following the UK's vote to leave the EU. Any consequences will take time to understand, including the impact on the UK's economy in the near term as companies are expected to hold back investment. Ongoing stimulus form the European Central Bank is highly likely and affirms the views that interest rates are likely to remain low for a prolonged period of time, both in Europe and globally. In the U.S., growth, while very modest, remains better than much of the developed world. While equity valuations look less attractive in the U.S. than in other countries, we remain cautious on the return outlook and continue to seek stocks with earnings upside in a stable, but modest growth environment. Our longer-term outlook for Japan remains subdued. We continue to see divergence across fiscal conditions and monetary policies in emerging market economies, and much of our exposure is concentrated in five countries: Indonesia, the Philippines, India, Peru, and Mexico. In China, we continue to favor Internet and consumer-oriented companies with solid fundamentals and growing end markets, but we still have concerns about the weakness in the Chinese industrial sector.