U.S. stocks gained in the quarter, with large-caps posting a sixth consecutive year of positive returns. Markets shook off tumbling oil prices and geopolitical concerns, finding support in steady U.S. economic improvement and renewed stimulus efforts in the eurozone and Japan. Non-U.S. developed and emerging markets stocks fell amid declining currencies and lower oil prices. U.S. bond returns were mostly positive, as high-quality issues outpaced lower-quality debt. Long-term U.S. Treasuries fared best as interest rates and inflation expectations fell over the quarter. High yield bonds declined as credit spreads widened on heightened concerns about the asset class's large exposure to the energy sector.
The Retirement Balanced Fund returned 0.55% in the quarter compared with 1.05% for the Combined Index Portfolio - Retirement Income Broad Index. For the 12 months ended December 31, 2014, the fund returned 3.91% versus 4.49% for the Combined Index Portfolio - Retirement Income Broad Index. The fund's average annual total returns were 3.91%, 6.87%, and 5.44% for the 1-, 5-, and 10-year periods, respectively, as of December 31, 2014. The fund's expense ratio was 0.57% as of its fiscal year ended May 31, 2014.
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We have a neutral position in stocks relative to bonds. Stocks are broadly priced at or above historical averages across multiple measures. At current valuations, the risk/return profile for equities now appears more evenly balanced, with less expected upside support from multiple expansion and margins at peak levels. We increased our overweight to non-U.S. equities as valuations remain modestly more attractive outside the U.S. While the U.S. economic cycle is further advanced than many non-U.S. economies, non-U.S. economies and companies are expected to benefit from their relative weaker currencies and supportive monetary policies over the near term. We increased our overweight to high yield relative to investment-grade bonds as recent underperformance has provided an opportunity to take advantage of higher yields.
We expect modest global economic growth over the next few quarters. The U.S. economy is improving gradually, supported by diminishing fiscal headwinds, increased state and local government spending, moderate job growth, and better private sector demand. Corporate balance sheets and profits remain healthy, while revenue growth in the low- to mid-single digits is consistent with modest economic growth. Japanese and European growth has moderated recently, but we are encouraged that more aggressive economic stimulus measures will bear fruit. Key risks to global markets include the impacts of global monetary policy actions and growing geopolitical concerns, particularly in the Middle East and Eastern Europe.