- Global financial markets were mostly negative in February and saw extreme volatility as geopolitical factors came into play. The developed and emerging market equity index (MSCI ACWI IMI) decreased -2.58% in February and -7.37% YTD. The S&P 500, which tracks large cap U.S. stocks, decreased –2.99% in February and –8.01% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +1.07% in February and decreased –8.66% YTD. The international developed equity index (MSCI EAFE) decreased -1.77% in February and –6.52% YTD. The emerging markets index (MSCI EM) decreased –2.99% in February and –4.83% YTD.
- In February, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +6 bps to +2.17%, the 10-year yield increased by +4 bps to +1.83%, and the 5-year yield increased by +9 bps to +1.71%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -1.12% in January and –3.25% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the fourth quarter of 2021 increased +7%, according to the “second” estimate released by the Bureau of Economic Analysis. GDP in the third quarter of 2021 increased +2.3%.
- The February Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 56.5% from 59.9% in January, which represents expansion at a lower rate and much lower than market expectations of 61%. The February’s Manufacturing PMI increased to 58.60% from January’s 57.60%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- February non-farm employment increased by 678,000 jobs, and the unemployment rate decreased to 3.8%, as reported by the Bureau of Labor Statistics on March 4, 2022. In February, employment increased in leisure and hospitality, professional and business services, healthcare and construction. Average Hourly Earnings (wages) increased +5.1% year-over-year in February.
- In February, the Total Equity Fund decreased -2.76% and -8.57% YTD. The International Equity Fund decreased -3.84% in February and -10.12% YTD. The Small Cap Equity Fund increased +1.64% in February and decreased -7.02% YTD. The Fixed Income Fund decreased -1.20% in February and -2.98% YTD.
- Equity managers had mixed performance in the month of February. Managers that outperformed their benchmarks were QMA, Blackrock, Channing and LSV, whereas managers that underperformed their benchmarks were SSGA, Westfield, Baillie Gifford and RBC.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), our most popular fund, underperformed its benchmark and decreased -2.11% in February and -6.43% YTD. The Alternatives Balanced Fund decreased -2.18% in February and -5.06% YTD. Finally, the Beyond Fossil Fuels Balanced Fund slightly underperformed its benchmark, decreased -1.96% in February and -6.16 YTD.