Health care stocks posted steep losses in the third-quarter sell-off. Although the period got off to a good start, the broad market, as measured by the S&P 500 Index, experienced a sharp pullback on concerns about China's economic growth prospects. However, the steepest losses for the health care sector occurred near the end of September after presidential candidate Hillary Clinton tweeted about price gouging in the specialty drug market and said she'd lay out a plan to cap the out-of-pocket costs for pharmaceuticals. Within the Lipper benchmark, every industry group declined-the biotechnology, pharmaceuticals, services, and life sciences segments each fell double digits. The products and devices industry group recorded more modest losses.
The Health Sciences Fund returned −12.56% in the quarter compared with −6.44% for the S&P 500 Index and −14.73% for the Lipper Health/Biotechnology Funds Index. For the 12 months ended September 30, 2015, the fund returned 16.94% versus −0.61% for the S&P 500 Index and 10.82% for the Lipper Health/Biotechnology Funds Index. The fund's average annual total returns were 16.94%, 27.59%, and 16.43% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2015. The fund's expense ratio was 0.77% as of its fiscal year ended December 31, 2014.
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Stock selection and, to a lesser extent, allocation decisions contributed to the portfolio's relative performance. Stock selection and an underweight allocation to biotechnology stocks generated the strongest relative outperformance contribution. We remain focused on biotech companies that develop medicines that prevent disease, relieve symptoms, and provide cures. Our services holdings, which account for a bit less than one-third of assets-our largest overweight allocation-also contributed to relative results. Within the segment, we favor the prospects for our managed care industry holdings, which we think will benefit from an era of depressed health care utilization as consumers cut back on their health care spending. The products and devices group was the portfolio's only relative performance detractor, entirely due to our underweight allocation.
Health care stocks have generated a strong multiyear period of outperformance that has surpassed our expectations. Therefore, we were not surprised to see profit taking amid a broad market sell-off. The health care universe is diverse and dynamic, and we believe it continues to represent one of the most attractive growth areas in the global economy. The development of new drugs and therapies to address major medical needs should remain a growth driver for the sector. We believe that the fears about drug-pricing legislation are overblown but that they could be an overhang for the market in the near term.