U.S. large-cap stocks rose slightly in the first quarter, as sharp gains in the second half of the period erased earlier losses. Through mid-February, world markets plunged as global economic growth concerns intensified and oil prices skidded below $30 per barrel. Equities rallied sharply through the end of March, as central banks in Europe and Japan announced new stimulus measures. Also, oil prices rebounded and the dollar weakened versus most currencies amid lower expectations for short-term interest rate increases this year. Domestic fixed income securities produced good returns, as longer-term rates declined. High yield bonds also produced good returns amid reduced risk aversion and rebounding commodity prices in the latter part of the quarter. Leveraged loans appreciated in value.
The Capital Appreciation Fund returned 2.04% in the quarter compared with 1.35% for the S&P 500 Index and 0.53% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. For the 12 months ended March 31, 2016, the fund returned 4.21% versus 1.78% for the S&P 500 Index and −1.99% for the Lipper Mixed-Asset Target Allocation Growth Funds Index. The fund's average annual total returns were 4.21%, 10.84%, and 8.34% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.70% as of its fiscal year ended December 31, 2015.
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During the quarter, our equity allocation decreased as we trimmed names that had performed well in the utilities and industrials and business services sectors. Given the sharp recovery in stock prices in the second half of the quarter and considering the age of the current economic expansion, we are cautious, and we added to our cash reserves position. Our overall fixed income allocation was little changed. We continue to like high yield bonds (we favor higher-quality issues in that market) because we believe this asset class is the most attractive on a risk/reward basis. However, high yield bonds are a little less compelling following their rally in the latter half of the first quarter.
We anticipate that headwinds from declining currencies and oil prices over the last year will begin to fade, potentially fueling modest acceleration in corporate earnings growth. Despite the initial sell-off in more cyclical sectors at the beginning of the year, we continue to find that overall valuations remain extended and that there are fewer opportunities in the market to pick up high-quality companies with compelling valuations. Thus, the portfolio is more conservatively positioned than it was at year-end. Volatility remains high, however, and we are poised to take advantage of any potential market shocks that create attractive buying opportunities.