- Global financial markets were mostly positive in December across the markets, a turn from the prior month’s direction. The developed and emerging market equity index (MSCI ACWI IMI) increased +4.00% in December and +18.54% YTD. The S&P 500, which tracks large cap U.S. stocks, increased +4.48% in December and +28.71% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +2.23% in December and +14.82% YTD. The international developed equity index (MSCI EAFE) increased +5.12% in December and +11.26% YTD. The emerging markets index (MSCI EM) increased +1.88% in December and decreased -2.54% YTD.
- In December, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +12 bps to 90%, the 10-year yield increased by +11 bps to 1.52%, and the 5-year yield increased by +12 bps to 1.26%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased –26% in December and -1.54% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2021 increased +2.3%, according to the “3rd” estimate released by the Bureau of Economic Analysis. GDP in the second quarter of 2021 increased +6.7%.
- The December Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 62% from 69.10% in November, which represents expansion at a higher rate and lower than market expectations of 66.90%. The December’s Manufacturing PMI decreased to 58.70% from November’s 61.10%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- December non-farm employment increased by 199,000 jobs, and the unemployment rate decreased to 3.9%, as reported by the Bureau of Labor Statistics on January 7, 2021. In December, employment increased in leisure and hospitality, professional and business services, transportation and warehousing, construction and manufacturing. Average Hourly Earnings (wages) increased +4.7% year-over-year in December.
- In December, the Total Equity Fund increased +3.52% and was up +16.93% YTD. The International Equity Fund increased +2.16% in December and was up +5.64% YTD. The Small Cap Equity Fund increased +4.16% in December and was up +14.18% YTD. The Fixed Income Fund decreased ‑0.06% in December and was down -1.76% YTD.
- Equity managers performed strongly in the month of December, and all managers, except Baillie Gifford, outperformed their respective benchmarks.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), the most popular fund, underperformed its benchmark, although it increased +2.23% in December and +9.73% YTD. The Alternatives Balanced Fund increased +1.62% in December and was up +11.09% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, increasing +2.97% in December and +13.40% YTD.