Health care stocks posted strong fourth-quarter gains that were in line with the broad stock market. Buoyed by monetary stimulus and signs of a rebound in the global economy, investors bid up stocks despite slowing revenue and earnings growth. Most of the major equity indexes reached record or multiyear highs. Within the benchmark Lipper Health/Biotechnology Funds Index, which returned almost 9% for the quarter, every industry group posted solid positive returns. The life science and services segments generated the strongest gains. Biotechnology, which accounts for 38% of the benchmark, was weakest but still advanced nearly 7%.
The Health Sciences Fund returned 8.78% in the quarter compared with 10.51% for the S&P 500 Index and 8.63% for the Lipper Health/Biotechnology Funds Index. For the 12 months ended December 31, 2013, the fund returned 51.40% versus 32.39% for the S&P 500 Index and 51.33% for the Lipper Health/Biotechnology Funds Index. The fund's average annual total returns were 51.40%, 27.80%, and 15.31% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.79% as of its fiscal year ended December 31, 2012. Investors should note that the fund's short-term performance is highly unusual and unlikely to be sustained.
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Biotechnology, the portfolio's largest allocation (36% of assets), was the best absolute contributor and generated the top relative performance contribution due to stock selection. We favor biotechnology companies, which are generally smaller than pharmaceuticals companies, because the introduction of one successful new product can materially affect the company's revenues and earnings. We believe that the discovery, development, manufacture, and commercialization of medicines remain the long-term drivers of value in health care, and we favor therapeutics companies. The portfolio's services holdings generated strong absolute and relative performance contributions thanks to good stock selection and an overweight allocation. Our largest allocation in this sector is managed care, which we think will benefit from depressed health care utilization. Our life sciences positions generated a double-digit return but trailed the sector in the benchmark.
There are no indications that economic growth will experience a sudden resurgence, and in the slow-growth scenario that we expect, health care could continue to perform well. Despite the strong advance over the past 12 months, the sector remains underrepresented in many investors' portfolios. We have become somewhat concerned about the strong run in the biotech space over the past few years and the impact of the Affordable Care Act. Nevertheless, we remain optimistic about the long-term prospects for health care stocks. However, in light of the portfolio's exceptional year-to-date performance, we believe that returns are unlikely to remain as strong going forward, and we have tempered our expectations for 2014.