- Global financial markets were nearly flat in January, as the markets globally experienced drawdowns in the last week of the month. The developed and emerging market equity index (MSCI ACWI IMI) decreased -0.45% in January and YTD. The S&P 500, which tracks large cap U.S. stocks, was down –1.01% in January and YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +5.03% in January and YTD. The international developed equity index (MSCI EAFE) decreased by -1.07% in January and YTD. The emerging markets index (MSCI EM) increased +3.07% in January and YTD.
- In January longer-term bond yields increased; the 30-year U.S. Treasury bond yield increased by +22 bps to +1.87%, the 10-year yield increased by +18 bps to +1.11%, and the 5-year yield increased by +9 bps to +0.45%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased –0.72% for January and YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the fourth quarter of 2020 increased +4%, according to the “advance” estimate released by the Bureau of Economic Analysis. The third quarter of 2020 GDP increased +33.4%.
- The January Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 58.70% from 57.70% in December. This increase represents expansion beating the market expectations of 56.8%. The January Manufacturing PMI decreased to 58.70% from December’s 60.70% Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- January non-farm employment increased by 49,000 jobs, and the unemployment rate decreased to 6.3%, as reported by the Bureau of Labor Statistics on February 5, 2021. In January, employment increased due to job gains in professional and business services and in both public and private education but were offset by losses in leisure and hospitality, retail trade, health care and transportation and warehousing. Average Hourly Earnings (wages) increased +5.4% year-over-year in January.
FUND PERFORMANCE UPDATES
- In January, the Equity Fund increased by +0.27% and YTD. The International Equity Fund increased by +0.45% in January and YTD. The Small Cap Equity Fund increased by +2.75% in January and YTD. The Fixed Income Fund decreased by -0.76% in January and YTD.
- UCF equity managers had mixed returns in January. Baillie Gifford and both QMA U.S. large cap and BFF outperformed. Westfield Capital Management, Blackrock, LSV and RBC EM underperformed the benchmark.
- Balanced Funds had mixed absolute returns but outperformed their respective benchmarks in January. The Moderate Balanced Fund, UCF’s most popular fund, decreased by -0.07% in January and YTD. The Aggressive Balanced Fund was up +0.07% in January and YTD. The Conservative Balanced Fund was down -0.34% in January and YTD. The Alternatives Balanced Fund was up +0.88% in January and YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +0.15% in January and YTD.