The Federal Reserve increased interest rates for the first time since 2006, raising the federal funds target rate range by 25 basis points on December 16. Investors widely expected the rate increase and had begun selling shorter-term Treasuries in advance of the Fed's move. Losses in the U.S. investment-grade corporate bond market were modest as investor demand absorbed relatively high levels of new supply. The financials sector was one of most resilient areas of the investment-grade corporate market along with technology, media, and telecommunications issues.
The New Income Fund returned −0.51% in the quarter compared with −0.57% for the Barclays U.S. Aggregate Bond Index and −0.59% for the Lipper Core Bond Funds Average. For the 12 months ended December 31, 2015, the fund returned 0.18% versus 0.55% for the Barclays U.S. Aggregate Bond Index and −0.07% for the Lipper Core Bond Funds Average. The fund's average annual total returns were 0.18%, 3.09%, and 4.64% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.60% as of its fiscal year ended May 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The portfolio's investment approach is built on the foundation of a strong global research platform, which informs both our bottom-up selection of individual securities and our top-down decisions about sector allocations and yield curve positioning. We seek to add value in a number of ways for shareholders and enhance returns in a range of market environments, and we strive to maintain a risk-aware approach that balances our conviction in individual holdings and with a theme to look for any dislocations that may present investment opportunities. Shareholders should also know that highly liquid cash, Treasuries, and mortgage-backed securities compose almost half of the fund's assets and provide a high degree of overall portfolio liquidity and flexibility.
As the market continues to adapt to a changing, global environment, we would not be surprised to see further bouts of significant volatility. In an important sense, this is good news, as volatility can create opportunities for careful and patient investors as others choose-or are forced-to sell assets at prices that do not reflect their fundamentals. We anticipate that sectors such as investment-grade corporates, floating rate bank loans, and high yield credit will continue to reveal opportunities in U.S. companies less exposed to international crosscurrents. Global awareness also means that we will continue to monitor international opportunities for thematic changes, particularly related to global growth, inflation, and dollar strength.