MARKETS:

  • Global equity markets posted positive returns in February, led by the U.S., as the economic data continued to show resilience. The global equity index (MSCI ACWI IMI) increased +4.29% in February and was up +4.90% YTD. The S&P 500, which tracks large cap U.S. stocks, increased +5.34% in February and was up +7.11% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +5.65% in February and was up +1.54%YTD. The international developed equity index (MSCI EAFE) increased +1.83% in February and was up +2.42% YTD. The emerging markets index (MSCI EM) increased +4.76% in February and was down -0.11% YTD.
  • In February, bond yields increased across maturities. The 30-year U.S. Treasury bond yield increased +16 bps to +4.38%; the 10-year yield increased +26 bps to +4.25%; and the 2-year yield increased +37 bps to +4.64%.
  • The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -1.41% in February and was down -1.68%

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the fourth quarter of 2023 increased +3.2%, according to the “Second” estimate released by the Bureau of Economic Analysis. In the third quarter of 2023, GDP increased +4.9%.
  • The February Services Purchasing Managers Index (PMI) decreased to 52.60% from 53.40% in January. This represents expansion and is lower than market expectations of 53.00%. The February Manufacturing PMI decreased to 47.80% from January’s 49.10%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
  • February non-farm employment increased by 275,000 jobs, and the unemployment rate increased to 3.9%, as reported by the Bureau of Labor Statistics on March 8. In February, employment increased in health care, government, food services and drinking places, social assistance, and transportation and warehousing. Average Hourly Earnings (wages) increased by 4.3% year-over-year in February.

PERFORMANCE UPDATES

  • The Total Equity Fund increased +4.25% in February and was up +4.36% YTD. The International Equity Fund increased +2.31% in February and was up +1.12% YTD. The Small Cap Equity Fund increased +5.77% in February and was up +3.46% YTD. The Fixed Income Fund decreased -1.11% in February and was down -1.29% YTD.
  • Equity managers’ performance was mixed during the month, and the managers that outperformed the index included PGIM’s domestic and global quantitative strategies, Xponance, Channing, Ballie Gifford and RBC. The managers that underperformed their benchmarks included Westfield, Blackrock and LSV.
  • The UCF Balanced Fund, UCF’s most popular fund, outperformed its benchmark returning +2.34% in February and was up +2.35% YTD. The Alternatives Balanced Fund increased +2.61% in February and was up +2.99% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning +2.89% in February and was up +3.77% YTD.