Growth stocks and large-cap stocks generated the most gains versus value stocks and small- and mid-cap stocks in a volatile year for equities. Due primarily to a collapse in commodity prices, corporate profit growth stalled. The economy was largely good for consumers as low energy prices and rising consumer confidence buoyed discretionary spending on big ticket items. The industrial, energy and materials sectors were hurt by low commodity prices as well as a strong dollar. Europe, Japan, China, and the U.S. all used monetary policies to strengthen their economies.
The Dividend Growth Fund returned 7.23% in the quarter compared with 7.04% for the S&P 500 Index and 6.17% for the Lipper Large-Cap Core Funds Index. For the 12 months ended December 31, 2015, the fund returned 2.36% versus 1.38% for the S&P 500 Index and −0.67% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 2.36%, 12.25%, and 7.80% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.65% as of its fiscal year ended December 31, 2014.
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.
Security selection within the industrial and business services sector drove relative outperformance. An underweight position in energy, the worst performing sector in the index, aided relative returns during the period. The health care sector contributed to outperformance. On the downside, stock selection in the consumer staples sector was the largest detractor from performance.
In the year ahead, we expect to see a continuation of subdued market returns coupled with higher volatility. We remain cautious and more defensively positioned. Recent weakness in China's economy and emerging markets in general, low energy and low commodity prices, and political risks given that it is an election year remain near-term uncertainties. Given the current market, we continue to concentrate on buying and holding high-quality companies that can demonstrate growth in earnings and dividends through a cycle, as we remain committed to providing risk-adjusted returns over the long term.