U.S. stocks recorded stellar gains in the final quarter of 2013. Both the large-cap S&P 500 Index and Dow Jones Industrial Average rose to record levels, while the Nasdaq Composite Index reached multiyear highs. Small- and mid-cap stocks surrendered market leadership to large-caps for the quarter, but ended with generally stronger gains for the year. Growth stocks moderately outpaced value shares among large-caps, but the opposite held true for the smaller-cap benchmarks.
The Mid-Cap Value Fund returned 9.15% in the quarter compared with 8.56% for the Russell Midcap Value Index, and 9.37% for the Lipper Mid-Cap Value Funds Index 9.77% for the Lipper Multi-Cap Value Funds Index. For the 12 months ended December 31, 2013, the fund returned 31.54% versus 33.46% for the Russell Midcap Value Index, and 36.38% for the Lipper Mid-Cap Value Funds Index 34.78% for the Lipper Multi-Cap Value Funds Index. The fund's average annual total returns were 31.54%, 20.67%, and 10.15% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2013. The fund's expense ratio was 0.81% as of its fiscal year ended December 31, 2012.
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.
Bottom-up stock selection drives our investment decisions. We assemble the portfolio one stock at a time based on rigorous fundamental research of each company. When evaluating a particular company, we are mindful of catalysts, such as the potential for a restructuring or acquisition, which should be reflected in a higher stock price. Our sector allocations remained broadly unchanged since the end of the third quarter. Relative to the Russell Midcap Value Index, consumer staples and materials remain our largest overweight sectors. Financials remain our largest underweight sector but command the biggest allocation on an absolute basis. We remain underweight in information technology, utilities, and industrials and business services. Our sector allocations are the result of individual stock picking, rather than a top-down view of a particular sector or industry.
Our long-term outlook for the stock market remains positive due to strong corporate fundamentals and supportive economic data. The Federal Reserve has assured markets it will keep monetary conditions accommodative. We expect economic growth to pick up in 2014 as fiscal headwinds abate and the private sector strengthens. For some time, we have predicted that consolidation in select industries would increase, and this trend appears to have started as several of our holdings either received bids or closed acquisitions in the past year. We would not be surprised to see an uptick in merger and acquisition activity in the near term.