Non-U.S. equity markets rallied during the quarter, largely based on strong September performance. For the period, the developed market MSCI EAFE® Index gained 11.56%. Emerging markets posted a return of 5.77% during the third quarter, underperforming developed markets, but marking a strong reversal from last quarters negative return. The MSCI ACWI® ex-USA Index gained 10.09% during the quarter. From a sector perspective, materials, technology and consumer discretionary were the strongest performers, while utilities and telecommunications services lagged the market. Among developed markets, Continental Europe was very strong during the quarter, up over 14%, while Japan delivered a more modest 6.7% return.
The Multi-Manager International Equity Fund slightly underperformed the benchmark during the quarter with a return of 9.81%, compared with the MSCI ACWI® ex-USA Index return of 10.09%. Stock selection in Continental Europe, Canada and non-Japan Asia represented a drag on returns. The Funds underweight to emerging markets aided relative results as developed markets outperformed.
Sub-adviser results were mixed during the period. The Europe-centric portfolio of Northern Cross outperformed, as Europe was the strongest region during the quarter. Northern Cross also delivered strong stock selection in the U.K. Value sub-adviser NFJ lagged during the period with notable underperformance in Continental Europe and Canada.
If you're a long-term investor looking to diversify your investments by pursuing the growth potential of international stocks, then this Fund may be right for you. It is intended for investors who are aware that foreign markets may involve additional risks, such as social and political instability, reduced market liquidity, and currency volatility.
- Invest in companies of any size throughout the world, but primarily in developed markets and generally in securities similar to those in the MSCI ACWI® EX-USA Index.
- Select complementary managers from a broad universe of investment managers.
- Blend managers into a single fund in an effort to provide an attractive combination of risk and return.