as of March 31, 2014
Fund Commentary
The S&P 500® Index generated modest results in the first quarter. In addition to adjusting to the continued deceleration in the U.S. Federal Reserve (Fed) quantitative easing, the equity markets were rattled by weaker-than-expected economic releases (largely stemming from severe winter weather), Fed comments about a potential sooner-than-expected increase in the federal funds rate target, and Russian military actions in Ukraine. After realizing stellar returns in 2013, investors continued to wrestle with equity valuations, given the apparent increase in geopolitical risk and slowing emerging market growth, in the face of solid corporate earnings and overall generally stable U.S. economic data.

The Large Cap Equity Fund posted a total return of 0.50% for the quarter, compared with 1.81% for the Fund’s benchmark, the S&P 500® Index. Stock selection detracted from results, particularly in the energy and industrials sectors. In addition, the Fund had an overweight position in high-quality names, which tended to lag the market during the quarter. Stock selection generated positive results in the information technology and utilities sectors.

Looking ahead, we believe our process of disciplined fundamental analysis and investments in companies that reach our expected return hurdle rate over long holding periods should succeed. As the Fed begins the process of removing stimulus from the market, we believe company-specific attributes, rather than the broader macroeconomic environment, will drive performance. Specifically, we believe the
low-quality valuation-driven rally will give way to an environment that rewards companies with solid long-term growth prospects.
Investor Profile

If you are a growth-oriented, moderate-risk investor looking for long-term capital appreciation without concern for current income, you will want to consider this fund as a core holding for your portfolio.

  • Combine forward looking fundamental stock analysis and intelligent portfolio construction with the goal of providing consistent returns over time.
  • Actively manage risk levels to be commensurate with performance objectives and avoid unintended risks.
  • Maintain a core-style fund that invests primarily in large-cap stocks with some mid-cap exposure.
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Not FDIC insured | May lose value | No bank guarantee

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Please carefully read the prospectus and summary prospectus and consider the investment objectives, risks, charges and expenses of Northern Funds before investing. Call 800-595-9111 to obtain a prospectus and summary prospectus, which contains this and other information about the funds.

©2014 Northern Funds | Northern Funds are distributed by Northern Funds Distributors, LLC, not affiliated with Northern Trust.