Stocks rose in the second quarter of 2014, adding to first-quarter gains and lifting many indexes to new all-time highs in June. Equities climbed amid signs that the U.S. economy was recovering from a weather-driven contraction in the first quarter and hopes that new stimulus measures in Europe would boost eurozone economies. Corporate merger activity was supportive, and signs of a de-escalation of the crisis in Ukraine were encouraging. Mid-caps outperformed small-caps but trailed large-caps, while mid-cap growth stocks trailed their value counterparts. Within the mid-cap growth universe, energy stocks performed very well, while consumer discretionary shares lagged.
The Mid-Cap Growth Fund returned 3.35% in the quarter compared with 4.37% for the Russell Midcap Growth Index, 4.33% for the S&P MidCap 400 Index, and 2.89% for the Lipper Mid-Cap Growth Funds Index. For the 12 months ended June 30, 2014, the fund returned 26.58% versus 26.04% for the Russell Midcap Growth Index, 25.24% for the S&P MidCap 400 Index, and 24.62% for the Lipper Mid-Cap Growth Funds Index. The fund's average annual total returns were 26.58%, 21.23%, and 11.30% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2014. The fund's expense ratio was 0.78% 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.
Although we assemble the portfolio on a stock-by-stock basis based on company fundamentals, it has a significant overweight in the industrials and business services sector. In recent years, we have especially focused on industrial companies as plays on what we term "the reindustrialization of America," and we have selected many companies over the years that have been able to generate strong growth over the long term. We believe that industrial stocks, although cyclical, will lead long-term market returns in the coming years, just as consumer; technology; and later, commodity stocks each took turns leading the market for long stretches over the last three decades.
We have become more defensive in our positioning in recent months as the bull market that began in early 2009 has become somewhat long in the tooth and is now greater in both duration and magnitude than the average of its postwar peers. Nevertheless, we note that the investor euphoria that has characterized many other aging bull markets is noticeably absent, and stocks do not appear particularly expensive in light of the very low yields available on bonds.