U.S. equities began the year with sharp losses. The combination of decelerating global economic growth, a plunge in oil prices, and a strong U.S. dollar weighed on equity performance from January through much of February. However, stocks began to reverse course in the second half of the quarter. By quarter-end, stocks were in positive territory due in part to additional economic stimulus in Europe and Japan, a rebound in oil prices, and a pullback in the relative value of the U.S. dollar. Corporate profit growth stalled due to a variety of economic factors, including a collapse in commodity prices. The economy was largely good for consumers due to low energy . Europe, Japan, and China all used monetary policies to try to strengthen their economies.
The Dividend Growth Fund returned 2.21% in the quarter compared with 1.35% for the S&P 500 Index and 0.82% for the Lipper Large-Cap Core Funds Index. For the 12 months ended March 31, 2016, the fund returned 2.81% versus 1.78% for the S&P 500 Index and −0.68% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 2.81%, 11.46%, and 7.53% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.64% as of its fiscal year ended December 31, 2015.
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.
The Dividend Growth Fund outperformed the S&P 500 Index. Security selection within consumer discretionary and health care sectors drove the portfolio's outperformance. An underweight allocation to the telecommunications sector was a drag on performance. We continue to believe that our position in the financials sector would benefit if interest rates were to rise. We feel that the health care sector is a better choice than consumer staples, and we are looking to add health care names. We trimmed consumer discretionary, and energy remained an underweight in the portfolio.
We expect to see a continuation of subdued market returns coupled with volatility. We remain cautious amid recent weakness in China's economy and emerging markets in general, low energy and low commodity prices, and political risks, given that it is an election year in the U.S. Given the current market, we continue to concentrate on buying and holding high-quality companies that can demonstrate growth in earnings and dividends through a cycle, as we remain committed to providing risk-adjusted returns over the long term.