Large-cap growth stocks produced modest first-quarter gains, although the technology-laden Nasdaq Composite ended the quarter with modest losses. Despite some large daily swings, stocks roughly traced a V-shape in the quarter, declining until the middle of February and then rising for the remainder of the period. Gains in the second half of the quarter offset earlier losses. Sector performance varied widely. Within the S&P 500, the small utilities and telecommunication services segments recorded strong gains. Consumer staples, industrials and business services, energy, materials, and technology shares also performed well. The health care and financials sectors performed poorly, however, falling more than 5%. The rebound in commodity prices helped value stocks outperform growth shares in the period.
The Blue Chip Growth Fund returned −5.48% in the quarter compared with 1.35% for the S&P 500 Index and −4.24% for the Lipper Large-Cap Growth Funds Index. For the 12 months ended March 31, 2016, the fund returned −0.86% versus 1.78% for the S&P 500 Index and −2.24% for the Lipper Large-Cap Growth Funds Index. The fund's average annual total returns were −0.86%, 13.06%, and 8.40% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.72% as of its fiscal year ended December 31, 2014.
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We concentrate on selecting 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. However, our largest-conviction holdings underperformed in the period. The portfolio's largest sector allocations were information technology, consumer discretionary, and health care. Stock selection detracted in each of those overweighted sectors. An underweight allocation to the financials sector and an overweight allocation to information technology were positive relative performance contributors. Despite a horrid quarter for high-quality growth stocks, we have not been selling our highest-conviction holdings, as we continue to believe that they offer compelling risk/reward characteristics.
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 only once or twice this year, 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. The portfolio's core holdings are durable-growth companies, those that we believe have the ability to increase revenues and earnings regardless of the global economic environment.