U.S. stocks rose despite occasional bouts of risk aversion and volatility and uncertainty about when the Federal Reserve might increase interest rates. Stocks in developed non-U.S. markets generally outperformed U.S. shares despite a stronger dollar versus several major currencies. U.S. bonds recorded gains amid weak inflation readings and decelerating economic growth. Long-term Treasuries climbed as long-term interest rates declined. High yield bonds advanced while investors again favored their attractive yields as oil markets somewhat rebounded.
The Balanced Fund returned 2.93% in the quarter compared with 1.78% for the Lipper Balanced Funds Index. For the 12 months ended March 31, 2015, the fund returned 7.63% versus 7.17% for the Lipper Balanced Funds Index. The fund's average annual total returns were 7.63%, 10.15%, and 7.20% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.68% as of its fiscal year ended December 31, 2013.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
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.
Total return information before August 31, 1992 reflects performance by managers other than T. Rowe Price.
Security selection was the quarter's largest contributor to relative performance. Our U.S. large-cap equity portfolios--both growth and value--as well as our non-U.S. equity portfolio contributed as all outperformed their style-specific benchmarks. Our overweight to non-U.S. equities relative to U.S. equities slightly aided relative results. Out-of-benchmark allocations to diversifying sectors generally detracted from relative performance, with our exposure to real assets equities weighing on results. However, our exposure to high yield bonds contributed to relative performance.
Central bank monetary policies should continue to diverge as the U.S. Federal Reserve begins to normalize interest rate policy as the recovery continues , Europe and Japan deepen quantitative easing to spur inflation and growth, and many emerging markets countries lower interest rates. In developed non-U.S. markets, we expect growth to improve as fiscal headwinds diminish, the credit environment mends, energy costs wane, and the euro weakens. However, growth among emerging markets is likely to decline, weighed down by China's move to a consumer-focused economy and Russia's sanction-fueled economic woes. Against this backdrop, we believe that our highly diversified portfolios and diligent fundamental research can enhance our ability to produce good long-term returns.