MARKETS:
- Global markets had mixed performance in February, as U.S. markets declined on concerns over growth, inflation and tariffs, while European and emerging markets, led by China were positive. The global equity index (MSCI ACWI IMI) decreased -0.60% in February and was up +2.73% YTD. The S&P 500, which tracks large cap U.S. stocks, decreased -1.30% in February and was up +1.44% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased -5.35% in February and was down -2.87% YTD. The international developed equity index (MSCI EAFE) increased +1.94% in February and was up +7.30% YTD. The emerging markets index (MSCI EM) increased +0.48% in February and was up +2.28% YTD.
- In February, bond yields decreased across maturities; the 30-year U.S. Treasury bond yield decreased –32 bps to 4.51%, the 10-year yield decreased –34 bps to 4.24%, and the 2-year yield decreased -23 bps to 3.99%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased +2.20% in February and is up +2.74%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the fourth quarter of 2024 increased +2.3%, according to the “2nd” estimate released by the Bureau of Economic Analysis. In the third quarter of 2024 GDP increased +3.1%.
- The February Services PMI increased to 53.50% from 52.80% in January. This represents expansion and is above market expectations of 52.60%. The February Manufacturing PMI decreased to 50.30% from 50.90% in January. 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 151,000 jobs, and the unemployment rate increased to 4.1%, as reported by the Bureau of Labor Statistics on March 7. In February, employment increased in health care, financial activities, transportation and warehousing, and social assistance. Average Hourly Earnings (wages) increased +4.0% year-over-year in February.
PERFORMANCE UPDATES
- The Total Equity Fund decreased -1.14% in February and was up +2.09% YTD. The International Equity Fund increased +1.13% in February and was up +5.04% YTD. The Small Cap Equity Fund decreased -5.93% in February and was down -2.51% YTD. The Fixed Income Fund increased +1.92% in February and was up +2.54% YTD.
- Equity managers’ performance was difficult in the quarter, with only Westfield and LSV outperforming, while all other managers underperformed.
- The UCF Balanced Fund, UCF’s most popular fund, underperformed its benchmark, returning -0.01% in February, and was up +2.23% YTD. The Alternatives Balanced Fund decreased -0.22% in February and was up +2.00% YTD. Finally, the Beyond Fossil Fuels Balanced Fund underperformed its benchmark, returning -0.31% in February, and was up +1.93% YTD.