U.S. large-cap stocks advanced in the first three months of 2016 as gains in the quarter's second half outweighed earlier losses. U.S. stocks followed global markets lower in the first six weeks of the year as investors reacted to poor manufacturing data out of China and a renewed decline in crude oil prices, which touched a 13-year low in February. Starting in mid-February, stocks recovered as oil prices climbed on speculation that oil-producing countries might agree to freeze or even cut output. Sentiment improved after the Federal Reserve left short-term interest rates unchanged at its March policy meeting and signaled a slower-than-expected pace of rate increases this year. Eight out of 10 sectors in the S&P 500 advanced. The health care and financials sectors each fell more than 5%.
The Capital Opportunity Fund returned 0.18% in the quarter compared with 1.35% for the S&P 500 Index and 0.82% for the Lipper Large-Cap Core Funds Index. For the 12 months ended March 31, 2016, the fund returned 1.73% versus 1.78% for the S&P 500 Index and −0.68% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 1.73%, 11.30%, and 7.02% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.70% as of its fiscal year ended December 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.
Our investment strategy relies on comprehensive fundamental research to identify favorable long-term opportunities in each sector of the S&P 500 Index. The fund aims to outperform the index by investing in our research analysts' high-conviction stocks while keeping sector and industry weightings in line with those of the benchmark. Seven out of 10 sectors in the S&P 500 Index detracted from the fund's relative performance in the quarter. Stock selection in industrials, financials, and health care detracted the most from relative performance. Conversely, stock selection in energy and utilities contributed the most to relative returns.
The S&P 500 Index ended the first quarter up 1.35%, including dividends, extending the current U.S. bull market into its eighth year. Given that the risks facing the global economy have grown from a year ago while valuations remain expensive, our outlook is cautious. Economic indicators do not point to a greater risk of recession, but heightened stock market volatility suggests that investors are concerned about potential external shocks that are not reflected in the data. These shocks include a hard landing in China, geopolitical unrest, and the impact of collapsing energy prices on emerging markets and various asset classes. We anticipate that heightened volatility will persist in the near term, and we plan to take advantage of market gyrations to buy fundamentally strong companies at lower prices.