- Global financial markets had positive performance in August, with continued leadership from large companies in the U.S. The developed and emerging market equity index (MSCI ACWI IMI) increased +2.50% in August and +15.91% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +3.04% in August and +21.58% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +2.24% in August and +15.83% YTD. The international developed equity index (MSCI EAFE) increased by +1.76% in August and +11.58% YTD. The emerging markets index (MSCI EM) increased by +2.62% in August and +2.84% YTD.
- In August, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by 3 bps to 1.92%; the 10-year yield increased by 6 bps to 1.30%; and the 5-year yield increased by 8 bps to 0.77%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased by –19% in August and -0.69% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2021 increased +6.6%, according to the “Second” estimate released by the Bureau of Economic Analysis. The first quarter of 2021 GDP increased by +6.3%.
- The August Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 61.70% from 64.10% in July, which represents expansion at a higher rate and above the market expectations of 61.50%. The August Manufacturing PMI increased to 59.90% from July’s 59.50%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- August non-farm employment increased by 235,000 jobs, and the unemployment rate decreased to 5.2%, as reported by the Bureau of Labor Statistics on September 3, 2021. This was lower than consensus estimates of adding 733,000 jobs. In August, employment increased in professional and business services, transportation and warehousing and manufacturing, as well as other services. Average Hourly Earnings (wages) increased +4.3% year-over-year in August.
FUND PERFORMANCE UPDATES
- In August, the Total Equity Fund increased by +2.58% and was up +15.67% YTD. The International Equity Fund increased by +2.14% in August and was up +9.80% YTD. The Small Cap Equity Fund increased by +2.57% in August and was up +14.04% YTD. The Fixed Income Fund decreased by ‑0.15% in August and was down -0.60% YTD.
- Equity managers that outperformed their respective benchmarks in August were SSGA, Westfield Capital Management and Baillie Gifford. Managers that underperformed the benchmarks were Quantitative Management, Blackrock, Channing Capital Management, LSV and RBC.
- All the Balanced Funds outperformed their benchmarks except Alternatives Balanced Fund, which performed in line with the benchmark. The Moderate Balanced Fund, UCF’s most popular fund, increased by +1.61% in August and +9.38% YTD. The Aggressive Balanced Fund was up +2.00% in August and +11.81% YTD. The Conservative Balanced Fund was up +0.94% in August and +5.36% YTD. The Alternatives Balanced Fund was up +1.35% in August and +10.29% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +1.72% in August and +12.03% YTD.