U.S. mid-cap stocks declined in the second quarter, trailing their large-cap counterparts, paring some of their strong year-to-date gains. Value stocks trailed growth in the mid-cap universe, extending their underperformance over the past year. Eight of 10 sectors in the Russell Midcap Value Index posted negative returns. The telecommunication services sector fell the most, while health care performed the best, aided by strong earnings and revenue and several buyout deals. U.S. gross domestic product contracted slightly in the first quarter, but subsequent readings have led most analysts to forecast modestly positive economic growth in 2015.
The Mid-Cap Value Fund returned 0.20% in the quarter compared with −1.97% for the Russell Midcap Value Index, −0.54% for the Lipper Mid-Cap Value Funds Index, −0.01% for the Lipper Multi-Cap Value Funds Index. For the 12 months ended June 30, 2015, the fund returned 3.95% versus 3.67% for the Russell Midcap Value Index, 3.05% for the Lipper Mid-Cap Value Funds Index, 3.63% for the Lipper Multi-Cap Value Funds Index. The fund's average annual total returns were 3.95%, 15.76%, and 9.49% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.80% as of its fiscal year ended December 31, 2014.
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Materials represent the portfolio's biggest overweight sector, and we have lately increased our exposure here due to many attractively valued opportunities. The portfolio has a large allocation to the metals and mining industry, particularly precious metals miners. The consumer discretionary sector accounts for a relatively large overweight following the latest Russell index rebalancing in June. Many of our holdings are in the media industry, where the disruption resulting from the shift to online content and distribution from traditional media has yielded more opportunities to own solid franchises at attractive prices. Consumer staples is another significant overweight sector replete with durable businesses and valuable brands. Most of our holdings are in the food products and food and staples retailing industries. On the other hand, energy is the biggest underweight sector, followed by information technology.
The year-to-date surge in corporate takeovers and a recent increase in shareholder activism have had a positive impact on several of our holdings. Because we focus on identifying undervalued or underperforming assets, some of our holdings are bound to draw the attention of acquisition-hungry companies or activist shareholders. The U.S. stock market's strong run since the spring of 2009 has made it more difficult to find companies trading below their intrinsic value. However, we are encouraged to see a decline in correlation, or the tendency of stocks within a sector to rise and fall in unison. With individual stock returns showing greater dispersion, we are finding more attractive investment opportunities despite the market's rise.