U.S. stocks recorded modest gains, supported by increased corporate merger and acquisition activity, reduced energy costs, low interest rates, and massive quantitative easing efforts in Europe and Japan. On the other hand, sluggish global growth and concerns about the timing and pace of Federal Reserve interest rate hikes weighed on markets. As the period ended, global markets pulled back amid concerns that Greece would exit the eurozone. U.S. small- and mid-cap stocks outperformed large-cap shares. The health care and consumer discretionary sectors performed best, while utilities, a sector that often behaves like bonds because of its relatively high dividend yields, declined sharply.
The Balanced Fund returned −0.09% in the quarter compared with −0.41% for the Lipper Balanced Funds Index. For the 12 months ended June 30, 2015, the fund returned 3.50% versus 3.11% for the Lipper Balanced Funds Index. The fund's average annual total returns were 3.50%, 11.79%, and 7.02% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2015. The fund's expense ratio was 0.68% as of its fiscal year ended December 31, 2014.
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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.
Total return information before August 31, 1992 reflects performance by managers other than T. Rowe Price.
Within U.S. stocks, our large-cap growth portfolio delivered the strongest absolute returns and significantly outperformed its underlying benchmark. Our large-cap core and value portfolios also boosted results. On a sector basis, health care was the top-contributing segment, led by names in the providers and services, pharmaceuticals, and biotechnology industries. Our international equity allocation produced strong absolute returns and outpaced its underlying benchmark. Our fixed income allocation was modestly positive overall. Our U.S. high yield bonds registered solid absolute gains and outperformed their underlying benchmark. Our investment-grade debt fell slightly and performed roughly in line with the Barclay's U.S. Aggregate Bond Index.
We expect modest global economic growth in 2015. U.S. growth is trending somewhat lower, while Europe and Japan show signs of improvement. Emerging markets growth rates are mixed but slowing. Economic growth in China, the world's second-largest economy, weighs on overall growth expectations. Despite expectations for stronger U.S. growth, 2015 projections are falling below 3%, which would be the 10th consecutive year of less than 3% growth. Inflation remains below the Fed's 2% target, although some of the key factors that helped mute inflation have receded as the strength of the U.S. dollar moderated and oil prices rose above recent lows.