The performance of global equity markets was dispersed this year with U.S. equities performing well along with indices in China, while other major International markets suffered, especially with their performance measured in U.S. dollars. The Federal Reserve ended its quantitative easing program in October 2014, and in the latter half of 2014 we saw the U.S. dollar strengthen significantly against all major currencies while the price of crude oil fell drastically, sliding to a five year low. Broadly speaking, the global economic recovery is being led by the U.S. while economic conditions in Japan, Europe, and China have weakened. Despite Japan ramping up their quantitative easing program, it is struggling to hit its 2% inflation target and it slipped into a recession in November after two quarters of negative gross domestic product (GDP) growth. Europe continues to struggle with low inflation and slowing growth, thus the European Central Bank seems willing to expand its balance sheet in 2015 in an attempt to boost lending and avoid deflation. And growth in China continues to slow.
It wasn’t a smooth ride for global equity markets as they exhibited quite a bit of volatility this year: from late January to early February 2014, from late July to early August 2014, from the beginning of September to mid-October 2014, and in the first half of December 2014. We capitalized on the market volatility this year by finding some new opportunities and adding to existing positions when their share price fell. Over the year, we built meaningful positions in Samsung Electronics Co., Ltd. (XKRX:000830) (technology, South Korea) and News Corporation (NWSA) (consumer discretionary, U.S.), and also added positions in Henderson Land Development Co. Ltd. (HKSE:00012) (financials, Hong Kong) and Altran Technologies SA (XPAR:ALT) (technology, France) in both Funds. Our equity exposure totaled 52.2% in Worldwide and 57.5% in International at year-end. Continue Reading »