2nd Quarter 2012
Investor confidence diminished during the second quarter as renewed fears concerning the eurozone crisis led to a retreat in overseas equity markets. This was particularly true in May, as the troubles of Spain and Greece returned front and center to the market’s attention, with the uncertainty causing increased volatility. The majority of world indices pared back the gains made during the first quarter of the year.
The Fund underperformed its MSCI EAFE & Emerging Markets Index benchmark during the quarter. It was not surprising that Emerging Markets suffered the most in such a volatile environment, as investors sought to de-risk. The portfolio’s Emerging Markets exposure underperformed as a whole, with the few notable exceptions being Tencent Holdings and China Mobile, which both delivered strong performance.
More defensive-orientated holdings and developed market exposure in the portfolio outperformed, with UK and Swiss holdings in particular contributing significantly to performance. Premium spirits maker Diageo led the way in the consumer arena, while firms such as Unilever and British American Tobacco also contributed positively. The Fund’s holdings in the Healthcare aided performance as well.
Our view remains that a ‘muddle-through’ solution will prevail in Europe, and that the global economy is in considerably better health, especially on a multi-year horizon, than the market is currently pricing in. Thus, the Fund remains positioned for growth, with overweight positions in the Energy and Materials sectors. From a global market perspective, we remain overweight Emerging Markets—which we believe will continue to be the main source of global growth during the next decade. The Fund has retained selective European exposure, primarily in the luxury goods sector, which we believe will benefit from rising demand from the Asian consumer.
Robin Geffen, Fund Manager & CEO
Neptune Investment Management
As of March 31, 2012, Tencent Holdings comprised 1.55% of the portfolio's assets, China Mobile – 3.06%, Diageo – 3.34%, Unilever – 3.67%, and British American Tobacco – 2.80%.
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.