Global equity markets delivered solid returns again for this fiscal year ending September 30, 2014 with the S&P 500 Index hitting a record high close on September 18, 2014, but it wasn’t a smooth ride. Global equity markets experienced significant volatility from late January 2014 to early February 2014, from late July 2014 to early August 2014, and for most of September 2014. In December 2013, the Federal Reserve announced they would begin tapering their quantitative easing program in early 2014 with it ending later that year despite continued slow economic growth. Towards the end of the fiscal year, equity markets fell as they digested the possibility of the Federal Reserve raising rates earlier than expected and the outlook for the global economy darkened with growth in Europe and China slowing. Additionally, the U.S. dollar strengthened significantly against most major currencies and crude oil fell sharply in the third quarter 2014.
Over the fiscal period, our equity exposure was relatively unchanged in the Worldwide Fund, 51.9% on September 30, 2014 versus 52.8% on September 30, 2013, while it increased in the International Fund, to 60.0% from 54.3%, respectively, as we found some new opportunities, specifically Henderson Land Development Co. Ltd. (HKSE:00012) (financials, Hong Kong) and APT Satellite Holdings Limited (HKSE:01045) (telecommunications, Hong Kong), and added to some existing positions, such as Hongkong & Shanghai Hotels Ltd. (HKSE:00045) (consumer discretionary, Hong Kong) and Springland International Holdings Ltd. (HKSE:01700) (consumer discretionary, China). Thus, our exposure to China (through Hong Kong listed equities) and Hong Kong rose to 7.2% from 3.4% this fiscal year in the International Fund. Continue Reading »