U.S. equities posted strong fourth-quarter returns, capping a stellar year for larger-capitalization growth stocks. Signs that the U.S. economy had regained some traction were key in driving the market's gains. Many companies reported expanding profit margins and earnings, although revenue growth continued to lag. All 10 S&P 500 sectors posted positive returns, with only the defensive telecommunications and utilities sectors lagging significantly. Small- and mid-cap stocks, which outperformed large-caps for the year, surrendered market leadership to large-caps in the fourth quarter.
The New America Growth Fund returned 11.27% in the quarter compared with 10.51% for the S&P 500 Index and 9.93% for the Lipper Multi-Cap Growth Funds Index. For the 12 months ended December 31, 2013, the fund returned 37.73% versus 32.39% for the S&P 500 Index and 36.52% for the Lipper Multi-Cap Growth Funds Index. The fund's average annual total returns were 37.73%, 22.65%, and 9.24% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.81% as of its fiscal year ended December 31, 2012.
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We seek companies that can grow organically and generate above-average earnings and cash flow growth, especially firms that are not dependent on economic growth to perform well. We made few significant shifts in the portfolio's sector allocations, but overall we emphasized growth companies and trimmed defensive holdings. The information technology and consumer discretionary sectors remain the portfolio's largest allocations, accounting for nearly half of our total net assets. Compared with the benchmark index, we have small allocations to financials, energy, and consumer staples stocks, which we believe will have a difficult time generating double-digit earnings growth.
We remain optimistic about the long-term prospects for large-cap domestic growth stocks. Even after recording strong gains this year, we believe that the valuations for many high-quality companies remain reasonable. In 2013, equities rallied on an expansion in price/earnings multiples and a shift toward owning stocks and away from Treasuries and other fixed income securities. Looking forward, we see a continuation of this trend taking place, and we believe that stocks can continue to appreciate and deliver attractive returns relative to other investments, although at a more moderate pace. We will attempt to take advantage of market volatility and investor uncertainty to buy fundamentally sound companies that can generate double-digit earnings and durable cash flow growth.