U.S. equities rose in the first quarter of 2013, lifting several major indexes to multiyear highs. Despite tighter fiscal policy stemming from U.S. federal tax increases in January and automatic budget cuts in March, shares advanced as the economy continued expanding, the labor market improved somewhat, and the Federal Reserve persisted with its asset purchase plans to suppress interest rates. Merger activity also lifted sentiment. Mid-cap value shares led other equity asset categories, as mid-caps outperformed both smaller and larger shares, and mid-cap value stocks handily outpaced their mid-cap growth counterparts.
The Mid-Cap Value Fund returned 12.06% in the quarter compared with 14.21% for the Russell Midcap Value Index, and 13.73% for the Lipper Mid-Cap Value Funds Index12.32% for the Lipper Multi-Cap Value Funds Index. For the 12 months ended March 31, 2013, the fund returned 20.28% versus 21.49% for the Russell Midcap Value Index, and 19.42% for the Lipper Mid-Cap Value Funds Index16.34% for the Lipper Multi-Cap Value Funds Index. The fund's average annual total returns were 20.28%, 8.81%, and 12.71% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2013. The fund's expense ratio was 0.81% as of its fiscal year ended December 31, 2011.
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 assemble the portfolio on a stock-by-stock basis and without an eye on sector targets. Nevertheless, the portfolio is now slightly underweight the consumer discretionary sector, because we trimmed back slightly as the sector has been one of the better-performing segments recently. We continue to see attractive values on a number of durable franchises with strong market positions, particularly media companies. The uncertainty stemming from the ongoing transition from print media to digital has yielded several opportunities to own strong companies at attractive values.
A common theme among the portfolio's better performers in recent months has been merger and acquisition activity and shareholder activism. Whether seeking to acquire undervalued, complementary assets, or to exploit the gap between public market value and intrinsic value, the market has functioned as it should by allocating capital to its highest return. We cannot predict when the fallow investments will bear fruit, nor can we divine the direction of the economy or markets. We can, however, stay true to our mission of identifying stocks that are priced below their intrinsic value.