as of March 31, 2014
Fund Commentary
After finishing 2013 on a strong note, stocks slowed as the first quarter unfolded. Weaker-than-expected economic data, largely attributed to severe winter weather, contributed to the subdued performance. In addition, U.S. Federal Reserve Fed Chairwoman Janet Yellen surprised the financial markets when she said the Fed could begin raising short-term rates six months after the tapering of quantitative easing ends. Russia’s aggression in Ukraine also rattled the financial markets. Overall, stocks advanced modestly, and investors favored value stocks over growth stocks.

The Large Cap Growth Fund posted a total return of -1.96% for the quarter, compared with 1.12% for the Fund’s benchmark, the Russell 1000® Growth Index. Stock selection detracted from relative performance in all sectors, with the weakest results in the industrials, information technology, healthcare and consumer staples sectors. Most of the underperformance occurred in the last 10 days of the quarter, as concerns about biotech drug pricing triggered a powerful and widespread rotation away from high-growth companies. Overall, the Fund’s sector allocation was slightly positive.

Looking ahead, we remain optimistic toward large-cap growth stocks. Overall, valuations appear favorable, given the slow-growth, low-inflation economic backdrop. Also, from a historical perspective, growth stocks remain attractively priced relative to the broad market and small-cap and value stocks. We believe the environment for stock selection has improved, as correlations have fallen and remain conducive to active management. From an investment theme perspective, we expect demographics and healthcare reform to present opportunities in the biotech and healthcare industries, while improving consumer confidence should positively influence the housing market and consumer durables industry. Furthermore, we believe the “internet of things” theme (connecting machines, appliances, autos and more to the Internet) will present attractive investment opportunities for years to come.
Investor Profile

If you fit the profile of a more aggressive investor able to accept greater volatility in exchange for higher potential return than is offered by the Growth Equity Fund, you will want to consider this Fund as a core holding for your portfolio. Because companies with these characteristics often retain their earnings, investors should expect low to no dividends.

  • Combine top-down, theme-driven approach with bottom-up fundamental stock selection to construct a portfolio of primarily large-cap growth stocks.
  • Select stocks with emphasis on growth potential, quality of earnings and management experience.
  • Seek to provide long-term capital appreciation for investors looking to participate in longer-term investment themes, which may contribute to increased volatility.
©2014 Northern Funds
Home  |   Prospectuses  |   Proxy Voting  |   Privacy  |   Site Map

©2014. This content is for your personal use only, subject to Terms and Conditions. No redistribution allowed.

Not FDIC insured | May lose value | No bank guarantee

*View investment term definitions

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.