Following is a summary of the markets and our funds’ performance for the month of June 2019, provided by our Chief Investment Strategist David A. Klassen.
MARKETS
- Global financial markets were positive in June as the markets reversed the negative results of May. The S&P 500, which tracks large cap U.S. stocks, was up 7.05% in June and is up 18.54% Y-T-D. The Russell 2000 Index, which tracks domestic small cap stocks increased 7.07% in June and is up 16.98% Y-T-D. The International developed equity index (MSCI EAFE), increased by 5.93% in June and is up 14.03% Y-T-D. The emerging markets index (MSCI EM) increased 6.24% in June and is up 10.58% Y-T-D.
- In June, bond yields decreased, and prices increased; the 30-year U.S. Treasury bond yield decreased 6bps to 2.52%, while the 10-year yield decreased 14bps to 2.00%, and the 5-year yield decreased 17bps to 1.76%.
- The Barclays Aggregate Index, which is a measure of U.S. Bond prices, increased 1.26% for June and is up 6.11% Y-T-D.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2019 increased 3.1%, according to the “third” estimate released by the Bureau of Economic Analysis. Fourth quarter 2018 GDP increased 2.2%.
- The June Purchasing Managers Index (PMI) was little-changed at 50.6 from 50.5 in the previous month. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- June non-farm employment increased by 224,000 jobs, and the unemployment rate was little- changed at 3.7%, as reported by the Bureau of Labor Statistics on July 5th. Employment trended positively in professional and business services, in health care, and in transportation and warehousing. Average Hourly Earnings (wages) increased 3.1% year-over-year.
FUND PERFORMANCE UPDATES
- In June, the Total Equity Fund increased by 6.27% and is up 16.66% Y-T-D. The International Equity Fund was up 5.64% and is up 14.96% Y-T-D. The Small Cap Equity Fund increased by 6.85% and is up 21.35% Y-T-D. The Fixed Income Fund was up 1.54% and is up 6.60% Y-T-D.
- Many UCF equity managers had positive relative returns, while all had positive absolute returns in June. For domestic markets, Quantitative Management Associates outperformed while Fiduciary underperformed their respective In domestic small cap markets, Dimensional Fund Advisors and BlackRock outperformed while Westfield and Fiduciary underperformed their respective benchmarks. For international markets, developed manager Baillie Gifford and LSV Asset Management and emerging markets manager the Royal Bank of Canada underperformed their respective benchmarks.
- All Balanced Funds had negative relative returns but positive absolute returns for June. The Moderate Balanced Fund, UCF’s most popular fund, increased 4.16% and is up 11.86% Y-T-D. The Aggressive Balanced Fund was up 5.02% and is up 13.66% Y-T-D. The Conservative Balanced Fund returned 3.04% and is up 9.60% Y-T-D. The Alternatives Balanced Fund was up 3.04% and is up 10.77% Y-T-D. Finally, the Beyond Fossil Fuels Balanced Fund increased 4.35% and is up 11.45% Y-T-D.