The S&P 500 Index returned 1.81% in the first quarter, with nine out of 10 sectors in the index posting positive returns. Sector performance was uneven, as some areas that provided leadership in 2013 pulled back while others rose. The utilities sector was strongest, with investors seeking income-producing stocks, while health care, information technology, and financials also did well. Consumer discretionary was the lone sector to decline during the period. As measured by various Russell indexes, value stocks topped their growth stock counterparts across all market capitalizations.
The U.S. Large-Cap Core Fund returned 1.52% in the quarter compared with 1.81% for the S&P 500 Index and 1.98% for the Lipper Large-Cap Core Funds Index. For the 12 months ended March 31, 2014, the fund returned 22.71% versus 21.86% for the S&P 500 Index and 21.61% for the Lipper Large-Cap Core Funds Index. The fund's 1-year and Since Inception (06/26/2009) average annual total returns were 22.71% and 17.71%, respectively, as of March 31, 2014. The fund's expense ratio was 1.33% 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.
Our stock selection in information technology and an overweight allocation to utilities benefited fund results during the period. We were also underweight in the poorly performing consumer discretionary sector, which helped our relative return. Our stock selection in financials, consumer staples, and industrials and business services stocks was detrimental, as was our overweight exposure to the last category. We were net buyers of financials and consumer discretionary shares during the quarter, and net sellers of information technology stocks. Generally high IT stock valuations make that group less appealing overall than it was previously.
While earnings continue to be largely supportive, the market's ascent has outpaced improvement in corporate fundamentals. Balance sheets remain strong, with low debt and high cash levels, but top-line growth is muted. We expect the U.S. economy to gradually improve as monetary policy remains broadly accommodative despite a reduction in the Federal Reserve's monthly asset purchases. Corporations are flush with cash, providing a cushion for possible shocks, and stock valuations remain attractive despite last year's strong performance. We are concerned about political uncertainty in Russia and the Ukraine, and the credit cycle in China, which have the potential to derail global growth. In the coming months, corporate earnings, cash flow, and job growth should become more important in assessing the health of individual companies and the overall economy. Effective stock selection is increasingly critical in our ongoing attempt to add value for our clients.