Most U.S. stock indexes recorded modest gains in the first quarter and reached new or multiyear highs as investors balanced favorable corporate earnings against economic and geopolitical concerns. The Dow Jones Industrial Average was the only major benchmark to record a loss. The utilities sector handily outpaced all other segments within the S&P 500 Index, followed by health care. Consumer discretionary was the only sector to register a loss for the period. Large-cap value stocks outperformed large-cap growth stocks.
The Value Fund returned 3.64% in the quarter compared with 1.81% for the S&P 500 Index and 2.30% for the Lipper Large-Cap Value Funds Index. For the 12 months ended March 31, 2014, the fund returned 25.98% versus 21.86% for the S&P 500 Index and 22.52% for the Lipper Large-Cap Value Funds Index. The fund's average annual total returns were 25.98%, 24.54%, and 8.80% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2014. The fund's expense ratio was 0.85% as of its fiscal year ended December 31, 2012.
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Sector allocations stayed broadly unchanged from the previous quarter. Financials and utilities represented the largest overweight sectors at quarter-end. The financials sector has rebounded strongly from the 2008-2009 crisis, but we believe valuations of select companies still appear reasonable on a normalized earnings basis, and the sector has good leverage to the improving economy and housing market recovery. In utilities, we favor unregulated power generation names, which include integrated utilities and independent power producers. These companies often pay a solid dividend while offering earnings growth from the deregulated portion of their business. Utilities ranked among the weakest sectors of 2013 as investors sold off higher dividend-yielding stocks, and we added to the sector during the quarter. Information technology and consumer discretionary, respectively, remain the largest underweight sectors.
We are pleased with the stock market's stellar performance over the past several months, but the magnitude of the rally has tempered our expectations for continued gains in the near term. Much of the credit for the stock market rise goes to the Federal Reserve, whose efforts to suppress interest rates and pump money into the economy encouraged investors to buy higher-risk assets. Despite an improved economic outlook, we are concerned that the rally may have outpaced the recovery. Given the disparity between the S&P 500's rise and the relatively modest pace of expected earnings growth of its underlying companies, we believe valuations have generally become much less appealing than they were a year ago. We believe that companies will need to deliver solid earnings and revenue growth to see further gains. As the Fed gradually winds down its stimulus program, fundamental factors like corporate earnings, cash flow, and jobs growth should become more important in assessing the health of individual companies and the overall economy.