April Market Review

May 19, 2017

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

MARKETS

  • Global financial markets posted gains in April driven by optimism over European election results. On a relative basis, U.S. equity markets underperformed European and Emerging market equities:

  • In April, bond yields declined (bond prices increased) across the curve; the 30-year U.S. Treasury bond yield decreased 6bps to 2.9%, the 10-year yield decreased 6bps to 2.28%, and the 5-year yield decreased 11bps to 1.81%.
  • Corporate bond prices, as measured by Barclays Aggregate Index, increased 0.77% for April and are up 1.59% Y-T-D.

ECONOMIC & GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP), in the first quarter of 2017, increased 0.7%, according to the advanced estimates released by the Bureau of Economic Analysis. The fourth quarter of 2016 GDP increased 2.1%.
  • At the March meeting, the Fed raised the target fed funds range by 25bps to 0.75%-1.00%. Expectations are for three hikes this year followed by another three hikes next year. The labor market has continued to strengthen and economic activity has continued to expand at a moderate pace.
  • US manufacturing grew slower than expected in April. The April Purchasing Managers Index (PMI) registered 54.8, down 2.4 percent from a March reading of 57.2. This reading is below market expectation of 56.5, per the Institute for Supply Management. A reading above 50 is considered economic expansion.
  • In April, employers added 211,000 jobs, exceeding economists’ expectations of 185,000. The unemployment rate decreased to 4.4%, the lowest since May 2007, as the number of job seekers declined. Both the labor force participation rate and the employment participation ratio changed slightly in April. February and March employment growth was revised down by a combined total of 6,000 lower than previously reported. Over the past 3 months, job gains averaged 174,000 per month.

PERFORMANCE AND PLAN UPDATES

  • The Total Equity was up 1.76% for April, and its Y-T-D return is 9.02%. The International Equity Fund was up 2.66% for April, and its Y-T-D return is 12.35%. The Small Cap Equity Fund was up 0.48% for April and its Y-T-D return is 3.72%. In April, net of fees, the Fixed Income Fund was up 0.67%, and its Y-T-D return is 1.84%.
  • The UCF equity managers’ performances relative to their respective benchmarks were mixed for April. International manager Baillie Gifford outperformed while LSV and Oaktree lagged.  Domestic Core equity managers QMA exceeded its benchmark performance in April while Fiduciary and State Street lagged. In small cap, Dimensional Fund Advisors outperformed while FMI and Westfield lagged relative benchmarks in April.
  • The Moderate Balanced Fund, in April, was up 1.29%, and is up 6.02% Y-T-D. The Aggressive Balanced Fund was up 1.48% in April, and has a return of 7.16% Y-T-D. The Conservative Balanced Fund was up 1.02% in April, and is up 4.27% Y-T-D. The Alternatives Balanced Fund was up 1.61% in April, and has a return of 5.81% Y-T-D. The Beyond Fossil Fuels Balanced Fund was up 1.49% for April, and is up 6.64% Y-T-D.
 
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