Large-cap growth stocks registered solid fourth-quarter returns largely because of a powerful rally in October; stocks posted modest positive returns in November and losses in December. Leadership within the blue chip benchmark was narrow and dominated by a select few large-cap companies. The "FANGs"--Facebook, Amazon.com, Netflix, and Google (renamed Alphabet)--as coined by the Street, generated outsized fourth-quarter gains and propelled the market all year. The best-performing sectors in the benchmark (each up better than 9%) were materials, health care, and information technology. The lagging sectors (none declined) included energy, utilities, and consumer staples.
The Blue Chip Growth Fund returned 9.86% in the quarter compared with 7.04% for the S&P 500 Index and 8.23% for the Lipper Large-Cap Growth Funds Index. For the 12 months ended December 31, 2015, the fund returned 11.15% versus 1.38% for the S&P 500 Index and 5.61% for the Lipper Large-Cap Growth Funds Index. The fund's average annual total returns were 11.15%, 15.63%, and 9.33% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2015. The fund's expense ratio was 0.72% as of its fiscal year ended December 31, 2014.
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.
We concentrate on owning high-quality, stable-growth companies that can perform well regardless of the economic environment. Our bottom-up stock selection process focuses on large- and mid-cap growth companies that deliver steady revenues, earnings, and cash flow growth. Our largest sector allocations were information technology, consumer discretionary, and health care. The information technology and consumer discretionary sectors were the portfolio's best absolute and relative performance contributors largely thanks to stock selection. However, stock selection in the health care and industrials and business services sectors hurt our relative returns.
We remain optimistic about the longer-term prospects for large-cap growth stocks and expect the U.S. to generate moderate economic growth in 2016. We believe that the Federal Reserve is likely to raise short-term interest rates at a slower pace than the market currently expects, which should not hurt stock returns. However, the recent weakness in China's industrial economy, falling energy and commodity prices, and periodic geopolitical flare-ups could perpetuate market volatility. Growth stocks remain fairly priced based on traditional valuation metrics versus their long-term history. We intend to invest in established growth themes and continue to favor the prospects for the information technology, health care, and consumer discretionary sectors. Our core holdings are invested in durable growth companies, those with the ability to increase revenues and earnings regardless of the global economic environment.