MARKETS
- Global financial markets were negative in January across the board, reversing the direction of the prior month. The developed and emerging market equity index (MSCI ACWI IMI) decreased -4.91% in January and YTD. The S&P 500, which tracks large cap U.S. stocks, decreased -5.17% in January and YTD. The Russell 2000 Index, which tracks domestic small cap stocks decreased ‑9.63% in January and YTD. The international developed equity index (MSCI EAFE) decreased ‑4.83% in January and YTD. The emerging markets index (MSCI EM) decreased –1.89% in January and YTD.
- In January, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +21 bps to 11%, the 10-year yield increased by +27 bps to 1.79%, and the 5-year yield increased by +36 bps to 1.62%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -2.15% in January and YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the fourth quarter of 2021 increased +6.9%, according to the “advance” estimate released by the Bureau of Economic Analysis. GDP in the third quarter of 2021 increased +2.3%.
- The January Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 59.9% from 62% in December, which represents expansion at a lower rate and was slightly higher than market expectations. The January’s Manufacturing PMI decreased to 57.60% from December’s 58.70%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- January non-farm employment increased by 467,000 jobs, and the unemployment rate was barely changed at 4.0%, as reported by the Bureau of Labor Statistics on February 4, 2022. In January, employment increased in leisure and hospitality, professional and business services, retail trade and transportation and warehousing. Average Hourly Earnings (wages) increased +5.7% year-over-year in January.
PERFORMANCE UPDATES
- In January, the Total Equity Fund decreased -5.97% and YTD. The International Equity Fund decreased -6.53% in January and YTD. The Small Cap Equity Fund decreased -8.52% in January and YTD. The Fixed Income Fund decreased ‑1.80% in January and YTD.
- Equity managers performed strongly in January, and all managers, except Baillie Gifford and State Street Global Advisors, outperformed their respective benchmarks.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), our most popular fund, underperformed its benchmark, and decreased -4.42% in January and YTD. The Alternatives Balanced Fund decreased -2.95% in January and YTD. Finally, the Beyond Fossil Fuels Balanced Fund underperformed its benchmark, decreasing -4.29% in January and YTD.