Health care stocks posted steep first-quarter losses, and the sector was the worst performer in the broad market as measured by the S&P 500 Index. In general, stocks were sharply lower in the first half of the three-month period and then rallied to quarter-end. Within the Lipper health/biotechnology benchmark, every industry group declined; the biotechnology and pharmaceuticals segments recorded double-digit losses, while the products and devices, life sciences, and services groups finished down 1% to 3%.
The Health Sciences Fund returned −12.16% in the quarter compared with −15.46% for the Lipper Health/Biotechnology Funds Index and 1.35% for the S&P 500 Index. For the 12 months ended March 31, 2016, the fund returned −12.94% versus −18.30% for the Lipper Health/Biotechnology Funds Index and 1.78% for the S&P 500 Index. The fund's average annual total returns were −12.94%, 20.89%, and 14.66% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.76% as of its fiscal year ended December 31, 2015.
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An overweight position and strong stock selection in the services sector contributed the most to our solid relative performance in the period. The services sector is a broad category that includes payors, providers, drug distributors, and health care technology companies. Managed-care companies, which we think will benefit from an era of depressed health care utilization, are our largest overweight in the sector. Overall, sector allocation decisions and, to a lesser extent, stock selection benefited our comparison with the benchmark. The portfolio's product and devices holdings generated a modest gain, but the segment was the largest relative performance detractor because of our significant underweight allocation.
At the end of 2015, we correctly penned, "Given the health care sector's strong gains over the past five years, we have become somewhat cautious about near-term performance." We added, "However, we continue to like the prospects for the sector over the long term, given the demographic, technological, and clinical tailwinds in our space." While we remain cautious in the near term, we remain steadfastly optimistic about the longer-term prospects for the sector's performance. We believe that the health care universe is diverse and dynamic and that it continues to represent one of the most attractive growth areas in the global economy.