MARKETS
- Global financial markets were strong in December, as vaccine deployment commenced, and Joe Biden was elected President. The Developed and Emerging Market Equity Index (MSCI ACWI IMI) increased +4.64% in December and is up +16.25% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +3.84% in December and is up +18.40% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +8.65% in December and is up +19.96% YTD. The International Developed Equity Index (MSCI EAFE) increased +4.65% in December and is up +7.82% YTD. The Emerging Markets Index (MSCI EM) increased +7.35% in December and is up +18.31% YTD.
- In December, longer-term bond yields increased; the 30-year U.S. Treasury bond yield increased by +7 bps to 1.65%, the 10-year yield increased by +9 bps to 0.93% and the 5-year yield stayed flat at 0.36%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, increased +0.14% for December and is up +7.51% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2020 increased +33.4%, according to the “third” estimate released by the Bureau of Economic Analysis. The second quarter of 2020 GDP decreased -31.4%.
- The December Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 57.20% from 55.90% in November. This increase represents expansion, beating the market expectations of 54.6%. The December Manufacturing PMI increased to 60.70% from November’s 57.50%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- December non-farm employment decreased by 140,000 jobs, and the unemployment rate was unchanged at 6.7%, as reported by the Bureau of Labor Statistics on January 8, 2021. In December, employment declined due to job losses in leisure and hospitality and private education but were partially offset by gains in professional and business services, retail trade and construction. Average Hourly Earnings (wages) increased 5.1% year-over-year in December.
FUND PERFORMANCE UPDATES
- In December, the Equity Fund increased by +5.13% and is up +15.54% YTD. The International Equity Fund increased by +5.36% in December and is up +16.16% YTD. The Small Cap Equity Fund increased by 10.68% in December and is up +23.68% YTD. The Fixed Income Fund increased by 0.29% in December and is up 6.87% YTD.
- Most UCF equity managers outperformed their respective benchmarks in December. Managers that outperformed their benchmark included Quantitative Management, SSGA, Westfield Capital Management, DFA, Blackrock and LSV Asset Management.
- All Balanced Funds outperformed their respective benchmarks in December. The Moderate Balanced Fund, UCF’s most popular fund, increased by +3.26% in December and is up +12.68% YTD. The Aggressive Balanced Fund was up +4.00% in December and is up +13.59% YTD. The Conservative Balanced Fund was up +2.08% in December and is up +9.91% YTD. The Alternatives Balanced Fund was up +3.43% in December and is up +12.00% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +3.37% in December and is up +13.91% YTD.