Large-capitalization growth stocks posted solid gains for the quarter, and value stocks in the large-cap universe slightly outperformed growth shares. Oil prices tumbled, leading to a double-digit decline in the energy sector, but lower gasoline prices, which created more disposable income, helped propel strong returns in the consumer staples and consumer discretionary segments. Health care stocks also logged good gains for the quarter, capping a fourth year of broad market outperformance. Despite consensus expectations that interest rates would rise in 2014, the 10-year Treasury note yield fell almost a full percentage point (3.03% to 2.17%), which benefited the performance of utility stocks, the best-performing sector for the quarter and the past 12 months.
The New America Growth Fund returned 4.36% in the quarter compared with 4.93% for the S&P 500 Index and 5.15% for the Lipper Multi-Cap Growth Funds Index. For the 12 months ended December 31, 2014, the fund returned 9.44% versus 13.69% for the S&P 500 Index and 11.08% for the Lipper Multi-Cap Growth Funds Index. The fund's average annual total returns were 9.44%, 15.26%, and 9.08% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.81% as of its fiscal year ended December 31, 2013.
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
The portfolio is concentrated in companies that we believe can grow organically and generate above-average earnings and cash flow growth. We favor companies that don't depend on economic expansion to perform well. The portfolio's information technology, consumer discretionary, and health care sectors remained the largest allocations (and significant overweights versus the S&P 500 Index), accounting for more than two-thirds of assets. Our tech and industrials and business service holdings were the strongest contributors to absolute returns, while energy and telecommunication services detracted. Compared with our benchmark, we have significant underweight allocations to financials, energy, and consumer staples stocks, and minimal exposure to telecommunication services and utilities. In our view, there are fewer companies in these sectors that can generate the above-average, revenue and earnings gains that we look for in portfolio holdings.
We remain optimistic about the near-and long-term prospects for large-cap domestic growth stocks. Even after recording strong gains for the last 12 months, we believe that the valuations for many high-quality companies remain reasonable. In 2014, select companies benefited from price/earnings multiple expansion and a shift away from Treasuries and other fixed income securities. Looking forward, we see a continuation of this trend taking place especially if interest rates begin to rise. We believe that stocks can continue to appreciate and deliver attractive returns relative to other investments, although at a moderate pace. We will attempt to take advantage of market volatility and investor uncertainty to buy fundamentally sound companies that can generate durable earnings and cash flow growth.