Mid-cap stocks performed well in the quarter and reached record highs in mid-March. Mid-caps modestly trailed small-caps, but both handily outperformed large-caps, which have higher exposure to foreign markets that have become more challenging for U.S. firms because of the strong U.S. dollar. Mid-cap growth stocks significantly outperformed their value counterparts. Health care, consumer staples, and information technology shares performed best within the mid-cap growth asset class, while utilities fared worst.
The Mid-Cap Growth Fund returned 6.52% in the quarter compared with 5.38% for the Russell Midcap Growth Index and 5.07% for the Lipper Mid-Cap Growth Funds Index. For the 12 months ended March 31, 2015, the fund returned 17.20% versus 15.56% for the Russell Midcap Growth Index and 11.85% for the Lipper Mid-Cap Growth Funds Index. The fund's average annual total returns were 17.20%, 17.02%, and 11.90% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2015. The fund's expense ratio was 0.78% as of its fiscal year ended December 31, 2013.
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The health care segment remains an important focus of the portfolio, although we are concerned about frothy valuations in the biotechnology industry. While many firms are seeing promising results from important new drug therapies, it seems clear that valuations do not reflect the ability of the health care system to pay for the full panoply of expensive treatments in development. As a result, our valuation-conscious approach and fundamental research have caused us to shift much of our focus to health care services firms.
We are concerned that the current bull market has become overextended, and further gains in the quarter have made it even harder to find compelling investment opportunities. Nevertheless, there is a notable absence today of the mass enthusiasm for stocks that is leading to valuation excesses in most of the market, apart from select favored areas, such as biotechnology. Stock valuations are slightly above historical averages but hardly indicative of manic enthusiasm, and most of the tech sector has escaped the wild excesses of the dot-com bubble years. We believe that particular opportunities remain for patient, long-term investors, especially given the growing focus by hedge funds and others on short-term returns. Through our fundamental research, we are finding opportunities in steadily, but not spectacularly, growing mid-cap companies with durable franchises and other advantages.