The fourth quarter of 2010 saw robust growth in the market, capping off a strong year for equities. Expectations for economic acceleration gained some traction, albeit limited by lingering concerns about job growth and increasing government debt. Political and monetary events in the U.S. gave investors and businesses a greater degree of confidence that had been missing during tumultuous previous quarters. While unemployment remains a concern, one that is likely to take several years to fully resolve, economic growth expectations indicated by healthy gains in U.S. markets have improved.
The Buffalo Science and Technology Fund was up 10.95% for the quarter, but underperformed the benchmark NYSE Arca Tech 100 Index, which was up 12.57%. For the year, the Fund returned 22.96%, slightly under the benchmark's 24.20%.
Data represented reflects past performance and is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original value. Current performance may be lower or higher than the performance quoted. Performance current to the most recent quarter end may be obtained by clicking here. Performance current to the most recent month end may be obtained by clicking here.
Our underperformance for the quarter was due to both stock selection and sector weighting in Health Care. Although we are seeing value in Health Care, these names lagged the index in the quarter and combined with our overweight position detracted from performance. Performance was helped in the quarter by stock selection and overweight within the Industrial Technology sector which enjoyed a nice pro-cyclical bounce in the fourth quarter.
Top performers for the fourth quarter were Chart Industries, Inc ., Schlumberger Ltd., and Monsanto Company, all within Industrial Technology. Top detractors included Amylin Pharmaceuticals, Inc. and NuVasive, Inc. in Health Care.
The Fund's portfolio is more broadly diversified than many typical technology funds and the benchmark Arca index, which tend to be heavily weighted in Information Technology names. Our broader definition of technology (i.e., any idea or solution which makes life easier or more productive) allows us to allocate more liberally among a diverse range of innovation-based sectors. We believe our broad definition and diverse exposure reduce volatility through diversification and provide a more attractive growth universe. There are times however, like this past quarter, where we give up a degree of upside volatility through the implementation of our strategy.
Our trend-based investment approach is geared toward identifying sustainable growth trends such as products and services leveraged to better and more cost effective health outcomes or new technologies that drive productivity and efficiency. We seek well-managed and well capitalized companies which are positioned to benefit from these sustainable and common sense growth trends and, more importantly, growth opportunities that are independent of broad economic recovery. Our fundamental analysis emphasizes large market opportunities, sustainable competitive advantage and profitable growth. We believe our disciplined valuation process should help us avoid overpaying for growth.
