Manager Commentary

As of March 31, 2013

International markets¹ returned 5.13% during the quarter ended March 31, 2013, as measured by the MSCI Europe, Australasia, Far East (EAFE) Index. January was characterized by the continued outperformance of European equities seen in the second half of 2012. European financial stocks drove much of this outperformance, benefiting from investor confidence regarding Europe’s ability to work out its credit concerns.  A sharp reversal of market sentiment towards Europe during February and March followed, driven by the Cypriot banking crisis which reminded investors that there are still challenges remaining in Europe. 

For the quarter, the European² component of the index delivered 2.81%. The index’s U.K. component, impacted by the same issues as Europe, delivered 2.51% to the index. Japan was by far the strongest performing index region. “Abenomics” (named for Japanese Prime Minister Shinzo Abe), characterized by a massive quantitative easing³ stance adopted by the Japanese Central Bank, grabbed the market’s attention. The result was a strong rally in Japanese equity markets, offset somewhat by a weakening yen. Overall, Japanese stocks in the index returned almost 12% during the quarter.

To read more download the full commentary here

¹International markets are represented by the MSCI EAFE (Net) Index. The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Performance for the MSCI EAFE Index is shown “net,” which includes dividend reinvestments after deduction of foreign withholding tax. Investors cannot invest directly in any index.

²Regional markets and associated returns are represented by each region’s constituents within the MSCI EAFE Index.

³Quantitative easing is monetary policy used by central banks to stimulate a national economy. Typically, central banks implement quantitative easing by buying financial assets from commercial banks and other private institutions, injecting a pre-determined quantity of money into the economy.