1st Quarter 2012
Global equity markets began 2012 on a positive note as a degree of stabilization in the eurozone and continued strong economic news from the U.S. buoyed stocks, as did the lack of a ‘hard landing’ in China. This meant that many markets, both developed and emerging, saw double-digit returns during the first quarter of the new year.
The Fund kept pace by posting more than 10% return for the period, though it lagged its MSCI EAFE & Emerging Market Index benchmark by roughly a percentage point. Returns benefited from exposure to both developed and emerging markets as well as the portfolio’s more cyclical economic tilt—with positions in the Materials and Technology sectors being the biggest contributors to performance. In addition, a favorable allocation and solid stock picking in developed markets such as Hong Kong, Japan, and the Netherlands produced strong returns.
Among the top individual holdings for the quarter were Norwegian fertilizer company Yara International, Russian steelmaker Norilsk Nickel, and Japanese industrials stock Komatsu. We viewed their success as further evidence of the sector rotation we have seen since the end of last year, with Materials and Industrials stocks rebounding strongly from a difficult 2011.
Overall, the Fund remains positioned for a continuation of growth in Emerging Markets, particularly China and Russia, where the portfolio is overweight and we see potent growth opportunities continuing through 2012. By our calculation, the Russian market is currently trading at just six times earnings, which is a 44% discount to the Emerging Markets average. We believe there is a huge amount of upside in Russia due to this discount, with improving corporate governance and the regulation of state industry likely to be high on the government’s agenda in 2012. As always, the Fund seeks exposure to global leaders across all sectors of the market that have strong balance sheets and continue to grow and diversify into new markets.
Robin Geffen, Fund Manager & CEO
Neptune Investment Management
As of December 31, 2011, Yara International comprised 2.46% of the portfolio's assets, Norilsk Nickel – 1.67%, and Komatsu – 2.86%.
Note: Investing in foreign markets involves the risk of social and political instability, market illiquidity, and currency volatility. Holdings in emerging markets entail the further risk of unstable legal systems, increased volatility, and even less liquidity.
Before investing, consider the Fund’s investment objectives, risks, charges, and expenses. Contact 800 992-8151 for a prospectus or summary prospectus containing this and other information. Please, read it carefully. Aston Funds are distributed by Foreside Funds Distributors LLC.