Treasury inflation protected securities (TIPS) produced negative results in the fourth quarter but held up better than fixed rate Treasuries as employment growth and a Federal Reserve rate hike made safe-haven debt less attractive to investors. Inflation remained well below the Fed's 2% target amid the steep decline in oil prices. Headline inflation, which includes energy and food prices, rose just 0.5% in the 12-month period ended November 30, driven by a nearly 15% drop in the energy subindex. Although tighter monetary policy usually produces an unfriendly environment for TIPS, the Fed has made it clear that it will need to see actual inflation before moving forward with additional rate hikes, a stance that could reduce the negative impact on the asset class.
The Inflation Protected Bond Fund returned −0.85% in the quarter compared with −0.64% for the Barclays U.S. TIPS Index and −0.62% for the Lipper Inflation Protected Bond Funds Average. For the 12 months ended December 31, 2015, the fund returned −1.51% versus −1.44% for the Barclays U.S. TIPS Index and −2.45% for the Lipper Inflation Protected Bond Funds Average. The fund's average annual total returns were −1.51%, 2.06%, and 3.55% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.58% as of its fiscal year ended May 31, 2015.
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We have positioned the portfolio to protect our shareholders in this low-inflation environment and provide additional income. Our TIPS positioning made up about 82% of the fund at the end of the quarter; this is about as small an allocation to TIPS as possible, as the fund will normally invest at least 80% of its assets in inflation-indexed securities. By using the firm's extensive research capabilities, we have been able to add higher-quality bonds that will provide income without unnecessarily adding to the risk of the portfolio; about 10% of the fund is invested in investment-grade corporate bonds.
While recent results in the TIPS market have been disappointing, investors should remember that an investment in TIPS can help preserve real value in their portfolio over longer time periods. It is difficult for our inflation-protection strategy to avoid the headwinds in the current low-inflation environment, but we are attempting to extract as much value as the market will allow while maintaining a high-quality portfolio and protecting shareholder capital. We will remain disciplined in our investment approach and use the firm's broad credit research capabilities in an effort to limit the portfolio's risk.