Tax-free municipal bonds produced good returns in the fourth quarter of 2014, outperforming taxable bonds for the year and capping a very strong year in absolute terms. Municipal debt prices rose along with long-term Treasuries, whose interest rates declined, despite strong U.S. economic growth and the conclusion of the Federal Reserve's monthly asset purchases in October. Global macroeconomic considerations, such as general economic weakness and falling bond yields in Europe and Japan appeared to be the catalysts. Demand for munis was strong, helping the market absorb an uptick in issuance later in the year as municipalities took advantage of low interest rates.
The Georgia Tax-Free Bond Fund returned 1.44% in the quarter compared with 1.40% for the Lipper Other States Municipal Debt Funds Average. For the 12 months ended December 31, 2014, the fund returned 9.58% versus 9.65% for the Lipper Other States Municipal Debt Funds Average. The fund's average annual total returns were 9.58%, 4.99%, and 4.28% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.54% as of its fiscal year ended February 28, 2014.
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As in prior periods, we kept a fairly high allocation to the health care sector, which has typically been a good source of yield in the municipal market. More generally, we continued our emphasis on revenue sectors, favoring the relative security of specific claims on revenues versus the generic pledges of taxing power associated with general obligation bonds. Revenue sectors have also typically provided more yield.
While yields remain low, we continue to believe that the municipal bond market remains a high-quality market that offers good opportunities for long-term investors seeking tax-free income. We remain concerned about the potential for rising rates and believe that short- and intermediate-term rates could continue to increase as we approach the first Fed rate hike. As such, our portfolios, while remaining conservative in their duration positioning, continue to underweight short-term securities in favor of longer-maturity bonds. In addition, we continue to have a strong bias toward revenue bonds that not only provide incremental yield over state and local general obligation debt, but also are largely insulated from the pension risk that we believe will become increasingly recognized by the market over time. Ultimately, we believe T. Rowe Price's independent credit research is our greatest strength and will remain an asset for our investors as we navigate the current market environment. As always, we are on the lookout for attractively valued bonds issued by municipalities with good long-term fundamentals, an investment strategy that we believe will continue to serve our investors well.