Non-U.S. developed markets stocks rose even though a stronger U.S. dollar eroded returns for U.S. investors. Eurozone stocks climbed after the European Central Bank announced a large quantitative easing program to weaken the euro and boost the economy. Japan emerged from recession with modest first-quarter growth as the Bank of Japan continues its aggressive stimulus. Business and consumer confidence in Japan, however, remain lackluster. Emerging markets rose overall, but performance varied between countries as commodity importers generally outpaced commodity exporters.
The Overseas Stock Fund returned 5.63% in the quarter compared with 5.00% for the MSCI EAFE Index and 4.70% for the Lipper International Large-Cap Core Funds Average. For the 12 months ended March 31, 2015, the fund returned 1.09% versus −0.48% for the MSCI EAFE Index and −0.27% for the Lipper International Large-Cap Core Funds Average. The fund's average annual total returns were 1.09%, 7.26%, and 2.13% for the 1-, 5-, and Since Inception (12/29/2006) periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.84% 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 Overseas 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 portfolio remains heavily focused in Europe. We are optimistic about the UK, where the government has done a good job getting its fiscal house in order since the global financial crisis. We are also encouraged that the eurozone is starting to show signs of a broader, more durable economic recovery. Japan is our second-largest country allocation. We are optimistic about the impact of stimulative monetary policies and recent incentives for companies to focus on corporate profitability and shareholder returns. However, we remain modestly underweight versus the benchmark due to concerns about the durability of recent growth and the government's willingness and ability to follow through on key structural reforms.
Equity valuations in Europe are appealing if the region's economy starts growing and earnings normalize, although we are mindful that looser monetary policy could further weaken the euro and eat into returns for U.S. dollar-based investors. In Japan, current equity valuations remain below pre-crisis levels and should continue to provide medium-term support, and profit margins have significant room to expand if the global economy recovers. Among emerging markets, there is a wide variation between inexpensive but challenged economies and stocks and more expensive, higher-quality assets.