February Market Review

March 24, 2017

Following is a summary of the markets and our funds’ performance for the month of February 2017, provided by our Chief Investment Strategist David Klassen.

MARKETS

  • Global financial markets continued to climb higher in February 2017, as investors remained optimistic about continuous economic and job growth, with accommodative monetary policy and stimulative fiscal policies.  The S&P 500, which tracks large-cap US stocks, increased 3.97% in February 2017 and is up 5.94% Y-T-D.  The Russell 2000 Index, which tracks domestic small-cap stocks, increased 1.93% in February and 2.33% Y-T-D. The international developed equity index (MSCI EAFE) was up 1.43% in February and 4.37% Y-T-D and the emerging markets index (MSCI EM) was up another 3.06% in February and has achieved 8.7% returns Y-T-D.
  • The 30-year US Treasury bond yield decreased 7 bps to 2.99%, the 10-year yield decreased 7 bps to 2.38%, and the 5-year yield increased 1 bps to 1.92%, as prices rose slightly.
  • Corporate bond prices, as measured by Barclays Aggregate Index, were up 0.67% for February.

ECONOMIC & GEOPOLITICAL HEADLINES

  • US gross domestic product (GDP), in the fourth quarter 2016, was up 1.9%, per revised “second” estimates released by the Bureau of Economic Analysis. The third quarter 2016 GDP increased 3.5%.
  • The labor market has continued to strengthen and economic activity has continued to expand at a moderate pace. In view of these conditions, the Fed decided to maintain the target range for the federal funds rate at 0.5 to 0.75 percent at the FOMC meeting on February 1.
  • Expansion in economic activity continued in February. The manufacturing sector showed that the economy expanded at a faster trend over the past few months. The January PMI registered 57.5, up 1.7% from January. This reading was above market expectations, and is the highest reading since November 2014, per the Institute for Supply Management. A reading above 50 is considered economic expansion.
  • The US labor market continues to grow. In February, employers added 235,000 jobs, surpassing economists’ expectations of 190,000. The unemployment rate ticked down slightly, to 4.7%, as the number of job seekers increased. Both the labor force participation rate and the employment participation ratio changed slightly in February. December 2016 and January 2017 employment growth was revised by a combined total of 9,000 more jobs than previously reported.  Over the past three months, job gains averaged 209,000 per month.

PERFORMANCE AND PLAN UPDATES

  • In February, net of fees, the Fixed Income Fund was up 0.73% and is up 1.10% Y-T-D. The Total Equity Fund was up 2.57% for February and is up 5.66% Y-T-D. The International Equity Fund was up 1.61% for February and is up 6.20% Y-T-D. The Small Cap Equity Fund was up 1.80% for February and is up 3.03% Y-T-D.
  • The UCF equity managers’ performance relative to their respective benchmarks was mixed for February but has generally been favorable for the year so far.
  • The Moderate Balanced Fund was up 1.77% in February and is up 3.78% Y-T-D. The Aggressive Balanced Fund was up 2.04% in February and is up 4.47% Y-T-D. The Conservative Balanced Fund was up 1.35% in February and is up 2.70% Y-T-D. The Alternatives Balanced Fund and Beyond Fossil Fuels (BFF) Balanced Fund were up 1.66% and 2.22% respectively for February and up 3.76% and 4.13% Y-T-D, respectively.
 
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