The International Equity Fund posted a total return of 4.02% for the quarter, compared with 5.13% for the Funds benchmark, the MSCI EAFE® Index. Stock selection in the financial services and consumer discretionary sectors and an underweight in consumer staples detracted from relative results. Stock selection in the industrials, telecommunications services and energy sectors contributed positively. In terms of industries, our positions in European aerospace companies and select Japan-based exporters led the way, while steel manufacturers and iron ore producers were among the largest detractors.
We expect the worlds leading central banks to continue to ease funding pressures and stimulate economic growth. We also believe company-specific fundamentals should regain prominence, leading to less risk-on/risk-off trading. These factors should help create a more favorable environment for our stock selection efforts, which emphasize fundamental research to identify stocks the market has mispriced. We seek to hold these undervalued stocks until they reach what our research identifies as their intrinsic value.
If you are a growth-oriented investor who is interested in the opportunities and portfolio diversification international investing offers, you may find this Fund suitable. You should have a more aggressive risk profile and be able to tolerate the above-average volatility and special risks that investing in foreign markets entails.