August Market Review

September 21, 2017

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

MARKETS

  • Global financial markets posted mixed performance in August. The S&P 500, which tracks large cap U.S. stocks, increased 0.31% in August and is up 11.93% Y-T-D. The Russell 2000 Index, which tracks domestic small cap stocks, was down -1.27% in August but is up 4.42% Y-T-D.  The international developed equity index (MSCI EAFE) was down 0.04% in August but is up 17.05% Y-T-D. The emerging markets index (MSCI EM), the best performing asset class year-to-date, was up 2.23% in August and is up 28.29% Y-T-D.
  • In August, the bond yield curve flattened; the 30-year U.S. Treasury bond yield decreased 17bps to 2.73%, while the 10-year yield decreased 18bps to 2.12%, and the 5-year yield decreased 13bps to 1.70%. Prices increased.
  • Corporate bond prices, as measured by Barclays Aggregate Index were up 0.90% for August and are up 3.64% Y-T-D.

ECONOMIC & GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP), in the second quarter of 2017, increased 3.0%, per the “second” estimates released by the Bureau of Economic Analysis, revised up from 2.6% previous estimates. First quarter 2017 GDP increased 1.2%, revised down from 1.4%.
  • U.S. manufacturing continued to grow and at a faster pace in August. The August Purchasing Managers Index registered 58.8, up 2.5 percentage points above the July reading of 56.3 and the highest reading since April 2011. Per the Institute for Supply Management, a reading above 50 is considered economic expansion.
  • In August, employers added 156,000 jobs, trailing economists’ expectations of 180,000. The unemployment rate ticked up slightly to 4.4%. June and July employment growth was revised down by a combined 41,000 less than previously reported.

PERFORMANCE UPDATES*

  • The Total Equity Fund was up 0.35% for August, and its Y-T-D return is 15.72%. The International Equity Fund was up 0.91% for August, and its Y-T-D return is 22.38%. The Small Cap Equity Fund was down 1.45% for August, and its Y-T-D return is 4.42%. In August, the Fixed Income Fund was up 0.86%, and its Y-T-D return is 3.93%.
  • The UCF equity managers’ performances relative to their respective benchmarks were mixed for August. All International managers outperformed their respective benchmarks in August.  Domestic Core equity manager QMA outperformed, while Fiduciary Large Cap and State Street lagged their respective benchmarks in August. Small cap managers Dimensional Fund Advisors (DFA) and Westfield trailed their respective benchmarks in August, but Fiduciary Small Cap outperformed.
  • The Moderate Balanced Fund, in August, was up 0.50% and is up 10.65% Y-T-D. The Aggressive Balanced Fund was up 0.43% in August and has a return of 12.55% Y-T-D. The Conservative Balanced Fund was up 0.64% in August and is up 7.78% Y-T-D. The Alternatives Balanced Fund was up 0.51% in August and has a return of 9.77% Y-T-D. The Beyond Fossil Fuels Balanced Fund was up 0.62% for August and is up 11.75% Y-T-D.

 

* Performance is reported net of fees for all funds and funds of funds.

 
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