Large-cap U.S. stocks declined in the third quarter, despite generally favorable domestic economic data. Energy and materials stocks posted deep losses, as commodity prices were broadly pressured by a continued oversupply in the global market, as well as expectations for weaker global demand, especially from China. Expectations for rising U.S. rates and a strengthening dollar have the potential to add additional downward pressure on prices, as most commodities are priced in U.S. dollars and become more expensive to non-U.S. consumers, which can dampen demand.
The New Era Fund returned −17.29% in the quarter compared with −6.44% for the S&P 500 Index and −20.77% for the Lipper Global Natural Resources Funds Index. For the 12 months ended September 30, 2015, the fund returned −30.37% versus −0.61% for the S&P 500 Index and −34.50% for the Lipper Global Natural Resources Funds Index. The fund's average annual total returns were −30.37%, −2.06%, and 1.30% for the 1-, 5-, and 10-year periods, respectively, as of September 30, 2015. The fund's expense ratio was 0.65% as of its fiscal year ended December 31, 2014.
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Despite the challenging near-term environment, we continue to see compelling investment opportunities amid a wide dispersion in returns among industries and companies. Areas of opportunity include energy exploration and production companies that are lowering their cost of production and accelerating growth through the development of their assets. North American shale producers are the best example. We are also looking at commodity-related companies whose input costs are declining while product sales are increasing due to the health of their end markets. These include specialty chemicals and packaging, among others.
We continue to believe the natural resources market is in the initial years of a secular downcycle for oil and other commodities. Within this challenging environment, however, we expect to see wide dispersion among industries and companies and are mindful that cyclical dislocations could boost select commodity prices. We maintain the structural integrity of our portfolio in the context of our longer-term downcycle view, while being mindful of short-term trading rallies, and will make tactical portfolio shifts as appropriate. We currently have an intense focus on companies with lower financial leverage and no hidden counterparty risk, given the presence of wide credit spreads and bankruptcy potential in the commodities marketplace.