Welcome To OneAmerica Funds
A Message From The Fund President
Welcome to the OneAmerica Funds website. OneAmerica Funds, Inc. has been in operation since 1989 and currently offers five portfolios: Value, Money Market, Investment Grade Bond, Asset Director and Socially Responsive. This website includes financial information, prospectuses and annual reports for each portfolio as well as insights from each portfolio's investment managers. I trust that you will find this information useful as you review your investments.
After posting three consecutive years of double digit returns and six consecutive years of positive returns, the S&P 500 index was virtually unchanged in the first half of 2015. Despite this pause in performance, the market continued to set new all-time highs during the first half of the year and we still have not experienced a correction of 10 percent or more since 2011. Equity market volatility has picked up slightly very recently but remains below long-term averages.
In the bond market, yields declined precipitously in early 2015 and approached the all-time low for ten year Treasuries, which was set in July 2012. The 30 Year Treasury set a new all-time low on January 30, 2015 at 2.22%. Globally, developed country government bond yields declined as well in early 2015 before bouncing from these historic lows back into their recent range. Credit spreads widened the first half of 2015. This can be attributed to a number of factors including recent economic weakness, geopolitical events in Europe, a stronger US dollar and weakness in commodities markets. Bond fund returns were generally flat to negative in the first half of 2015 as interest rates ended slightly higher and credit spreads were wider than at the beginning of the year.
Markets have begun to focus their attention on when the Federal Reserve will begin to increase interest rates. The Fed continues to weigh economic data which has been weak of late and they have been patient thus far. Current indications are that the Fed may consider an initial rate increase late in 2015. More important than the date of the initial increase will be the speed with which they raise short-term interest rates which market participants are expecting to be very gradual.
As we began the year, economic growth appeared poised to accelerate after a number of years of below trend growth. Once again, harsh winter weather hit in the Northeast and the economy actually contracted in the first quarter for the second year in a row. The unemployment rate continues to decline which is the relative bright spot in terms of economic data. Inflation remains well in check. Other economic data has not indicated that this recovery is strengthening materially. In fact, recent data indicates that we may continue to experience more of the slow growth, low inflation environment we have been in for the past few years. Still, growth in the 2 percent to 3 percent range is much better than that being experienced in other developed economies, particularly those in Europe and Japan.
Overall, financial markets have absorbed a number of headwinds remarkably well. Weak domestic economic data, the divergence of US monetary policy from that of other developed countries, the collapse of commodities prices and a much stronger US dollar all create challenges for US companies. Overall though, risk assets have been well supported by this environment of global monetary policy accommodation. While stock performance so far in 2015 has been lackluster relative to recent years, this is not surprising. Given the last few years of strong performance of risk assets, it makes sense that markets “take a pause to catch their breath” in early 2015.
OneAmerica Funds, Inc. is comprised of five portfolios, each with a different directive. The Value Portfolio is an equity portfolio utilizing a multicap, value approach. The investment objectives of the Money Market Portfolio are to provide current income, preserve assets and maintain liquidity. The Investment Grade Bond Portfolio focuses primarily on intermediate investment grade bonds. The Asset Director Portfolio is a managed portfolio investing in stocks, bonds and cash based on our outlook for these various asset classes. And finally, the Socially Responsive Portfolio typically invests in financially strong companies that also adhere to specific moral beliefs.
Investment performance for each portfolio in OneAmerica Funds, Inc. for the first half of 2015 has been listed below.
Portfolio Class O Advisor Class
Value Portfolio (0.7%) (0.8%)
Money Market Portfolio 0.0% 0.0%
Investment Grade Bond Portfolio (0.1%) (0.3%)
Asset Director Portfolio (0.1%) (0.2%)
Socially Responsive Portfolio (1.4%) (1.6%)
Performance numbers for the OneAmerica portfolios are net of investment advisory fees and other expenses paid by each portfolio, but do not reflect specified contract charges and mortality and expense risk charges.
As always, I am grateful for the confidence you have placed in us and for continuing to invest in OneAmerica Funds, Inc.
John C. Mason President OneAmerica Funds, Inc.
August 21, 2015
The Fund was notified of a problem with the Portfolio's external third-party accounting agent’s system on Monday, August 24, 2015. Due to this system problem, the August 24th through August 28th net asset values (NAVs) for certain Portfolios may reflect Portfolio pricing and holdings as of a prior date and/or may not have been reported accurately. Once accurate prices are received and verified from the Portfolios' third-party accounting agent all account balances and transactions will be updated as necessary.
The views expressed in this commentary are those of the author as of August 21, 2015 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation to buy, sell, or hold any specific security and are subject to change at any time.