MARKETS:
- Markets across the globe retracted in February after a strong rally in January as the job markets showed continued resilience, increasing expectations for terminal rates. The developed and emerging market equity index (MSCI ACWI IMI) decreased -2.87% in February and was up +4.10% The S&P 500, which tracks large cap U.S. stocks, decreased –2.44% in February and was up +3.69% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –1.69% in February and was up +7.89% YTD. The international developed equity index (MSCI EAFE) decreased -2.09% in February and was up +5.84% YTD. The emerging markets index (MSCI EM) decreased -6.48% in February and was up +0.90% YTD.
- In February, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased +28 bps to 3.93%, the 10-year yield increased +40 bps to 3.92%, and the 5-year yield increased +55 bps to 4.18%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -2.59% in February and was up +0.41% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the fourth quarter of 2022 increased +2.7%, according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter of 2022, GDP increased +3.2%.
- The January Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 55.10% from 55.20% in January, which represents expansion territory and higher than market expectations of 54.50%. February’s Manufacturing PMI increased to 47.70% from January’s 47.40%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
- February’s non-farm employment increased sharply by 311,000 jobs, and the unemployment rate increased to 3.6%, as reported by the Bureau of Labor Statistics on March 10. In February, employment increased in leisure and hospitality, retail trade, health care and government. Average Hourly Earnings (wages) increased +4.6% year-over-year in February.
PERFORMANCE UPDATES
- The Total Equity Fund decreased -2.84% in February and is up +4.88% YTD. The International Equity Fund decreased -3.77% in February and is up +4.97% YTD. The Small Cap Equity Fund decreased -0.95% in February and is up +8.82% YTD. The Fixed Income Fund decreased -2.20% in February and is up +0.75% YTD.
- Equity managers’ performance versus their respective benchmarks was mixed during the month. The equity managers that outperformed included Westfield, BlackRock, Channing and LSV.
- The UCF Balanced Fund, UCF’s most popular fund, outperformed its benchmark, returning -2.52%% in February and is up +3.22% YTD. The Alternatives Balanced Fund decreased -1.46% in February and is up +2.74% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning -1.80% in February and is up +3.21% YTD.