May Market Review

June 26, 2017

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


  • Global financial markets posted mixed performance in May, as market volatility declined following the French presidential election. On a relative basis, U.S. equity markets underperformed European and Emerging market equities in May. The S&P 500, which tracks large cap U.S. stocks, increased 1.41% in May, and is up 8.66% Y-T-D.  The Russell 2000 Index, which tracks domestic small cap stocks, was down 2.03% in May and is up 1.48% Y-T-D. The international developed equity index (MSCI EAFE) was up 3.67% in May and is up 14.01% Y-T-D. The emerging markets index (MSCI EM), the best performing asset class year-to-date, was up 2.96% in May and is up 17.41% Y-T-D.
  • In May, bond yields declined, and prices increased, across the curve; the 30-year U.S. Treasury bond yield decreased 9bps to 2.86%, the 10-year yield decreased 8bps to 2.20%, and the 5-year yield decreased 6bps to 1.75%.
  • Corporate bond prices, as measured by Barclays Aggregate Index, increased 0.77% in May and are up 2.38% Y-T-D.


  • U.S. gross domestic product (GDP), in the first quarter of 2017, increased at an annual rate of 1.2%, according to the “second” estimate released by the Bureau of Economic Analysis. The fourth quarter of 2016 GDP increased 2.1%.
  • At the May 3, meeting, the Federal Reserve (Fed) kept the target fed funds range at 0.75-1.0%. The meeting minutes, which were released later in the month, showed that discussion had begun on the gradual reduction of the Fed balance sheet. The labor market has continued to strengthen and economic activity has continued to expand at a moderate pace.
  • S. manufacturing continued to grow in May. The May Purchasing Managers Index (PMI) registered 54.9, up 0.1 percentage point from April reading of 54.8. This reading was higher than expected, per the Institute for Supply Management. A reading above 50 is considered economic expansion.
  • In May, employers added 138,000 jobs, which was below economists’ expectations of 184,000. The unemployment rate moved down a tick to 4.3%, the lowest since May 2001. Both the labor force participation rate and the employment participation ratio changed slightly in May. March and April employment growth was revised down by a combined total of 66,000 lower than previously reported. Over the past three months, job gains averaged 121,000 per month.


  • The Total Equity was up 2.06% in May, and its Y-T-D return is 11.27%. The International Equity Fund was up 3.74% for May, and its Y-T-D return is 16.55%. The Small Cap Equity Fund was down 1.06% for May, and its Y-T-D return is 2.62%. In May, net of fees, the Fixed Income Fund was up 0.72%, and its Y-T-D return is 2.57%.
  • UCF equity managers’ performances relative to their respective benchmarks were mixed for May. International manager Baillie Gifford outperformed while LSV and Oaktree lagged.  Domestic Core equity managers lagged the benchmark. In small cap, Fiduciary Management and Westfield outperformed, while Dimensional Fund Advisors lagged, their respective benchmarks.

The Moderate Balanced Fund, in May, was up 1.52% and is up 7.64% Y-T-D. The Aggressive Balanced Fund was up 1.75% in May, and has a return of 9.04% Y-T-D. The Conservative Balanced Fund was up 1.18% in May, and is up 5.50% Y-T-D. The Alternatives Balanced Fund was up 1.28% in May, and has a return of 7.17% Y-T-D. The Beyond Fossil Fuels Balanced Fund was up 1.65% for May, and is up 8.40% Y-T-D.

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