January 2018 Market Review

March 1, 2018

Following is a summary of the markets and our funds’ performance for the month of January 2018, provided by our Chief Investment Strategist David Klassen.


  • Global financial markets surged in the first month of 2018, with strong gains across equities. The S&P 500, which tracks large cap U.S. stocks, increased 5.73% in January 2018. The Russell 2000 Index, which tracks domestic small cap stocks, was up 2.61%, and the international developed equity index (MSCI EAFE) was up 5.02% in January. The emerging markets index (MSCI EM) rallied 8.33% continuing its trend from 2017 as the best performing asset class.
  • In January, the bond yield curve flattened; the 30-year U.S. Treasury bond yield increased 20bps to 2.94%, while the 10-year yield increased 30bps to 2.71%, and the 5-year yield increased 31bps to 2.52%.
  • Corporate bond prices, as measured by Barclays Aggregate Index decreased 1.15% for January.


  • U.S. gross domestic product (GDP), in the fourth quarter of 2017 increased 2.6%, according to the “advance” estimates released by the Bureau of Economic Analysis. Third quarter 2017 GDP increased 3.2%.
  • S. manufacturing continued to grow in December. The January Purchasing Managers Index (PMI) registered 59.1, slightly below the December reading of 59.7. Per the Institute for Supply Management, a reading above 50 is considered economic expansion.
  • In January, non-farm employment added 200,000 jobs, the unemployment rate remained unchanged at 4.1%, for the fourth consecutive month. November and December job gains were revised down by a combined 24,000. Average Hourly Earnings increased by 2.9% year-over-year.  The strong labor market and wage growth prompted higher expectation for monetary policy normalization.


  • The UCF Funds began 2018 with strong returns in equities. In January net of fees, the Total Equity Fund was up 5.28% net of fees. The International Equity Fund was up 5.70% net of fees, the Small Cap Equity Fund was up 2.94% net of fees; however, the Fixed Income Fund was down 0.59% net of fees.
  • The UCF equity managers’ performances were mixed relative to their respective benchmarks. International manager Oaktree outperformed its benchmarks, while Baillie Gifford and LSV lagged their respective benchmark. Domestic large cap equity managers lagged their respective benchmarks. All small cap managers outperformed their respective benchmarks in January.
  • In January, all UCF Balanced Funds outperformed their respective benchmarks.


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