Despite some large daily swings, stocks roughly traced a V-shape in the quarter, declining through the middle of February and then rising for the remainder of the period. Further global monetary easing and a rebound in oil prices led to gains in the second half of the quarter, which more than compensated for earlier losses for the mid- and large-cap benchmarks. Smaller shares recorded losses. Among mid-caps, growth stocks trailed value shares by a wide margin.
The Mid-Cap Growth Fund returned −0.42% in the quarter compared with 0.58% for the Russell Midcap Growth Index and −1.52% for the Lipper Mid-Cap Growth Funds Index. For the 12 months ended March 31, 2016, the fund returned −0.38% versus −4.75% for the Russell Midcap Growth Index and −7.18% for the Lipper Mid-Cap Growth Funds Index. The fund's average annual total returns were −0.38%, 11.22%, and 9.41% for the 1-, 5-, and 10-year periods, respectively, as of March 31, 2016. The fund's expense ratio was 0.77% as of its fiscal year ended December 31, 2015.
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The portfolio's large allocation to the industrials and business services sector contributed to results in the period. Our bottom-up selection process has traditionally led us to a focus on the sector, and we also believe that the economy is still in the early innings of a manufacturing rebound after decades of outsourcing production to lower-wage nations. Although the recent rise in the U.S. dollar has weighed on domestic manufacturing somewhat, growing wage pressures in Asia and increasingly stressed and extended supply lines continue to make production in the U.S. attractive to domestic as well as foreign companies. Conversely, our large allocation to health care weighed on returns. More recently, we have been reducing our investments in therapeutics companies in favor of service provider and equipment names.
While the market's steep pullback in late 2015 and early 2016 skimmed some of the froth off the most richly valued and fastest-growing stocks, it did little to increase the broader market's valuation appeal, particularly of the stocks that we typically favor. As a result, we have remained unable to locate many compelling investment ideas in recent months, and we did not put a great deal of cash to work during the downturn. At the same time, our outlook is not bearish, and we do not anticipate a recession in the coming months or another systemic crisis that would push stock prices substantially lower. Rather, our sense is that the stock market is in the midst of a slower-moving transition away from a focus on "growth at any price"and the easy money era that underwrote it. As the market transitions, industries and companies in which revenues have been favored over profits are likely to hit air pockets. We see our main mission in the coming months as guiding the portfolio around this turbulence while keeping an eye out for opportunities to invest in truly profitable firms at reasonable prices.