MARKETS:

  • Global equity markets posted mixed returns in January, exhibiting continued strength in U.S. large cap stocks but weaker performance in developed and emerging markets. The global equity index (MSCI ACWI IMI) increased +0.59% in January and YTD. The S&P 500, which tracks large cap U.S. stocks, increased +1.68% in January and YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –3.89% in January and YTD. The international developed equity index (MSCI EAFE) increased +0.58% in January and YTD. The emerging markets index (MSCI EM) decreased -4.64% in January and YTD.
  • In January, bond yields increased across maturities. The 30-year U.S. Treasury bond yield increased +19 bps to 4.22%; the 10-year yield increased +11 bps to 3.99%; and the 2-year yield increased +4 bps to 4.27%.
  • The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -0.27% in January and YTD.

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the fourth quarter of 2023 increased +3.3%, according to the “Advanced” estimate released by the Bureau of Economic Analysis. In the third quarter of 2023, GDP increased +4.9%.
  • The January Services Purchasing Manager Index (PMI) increased to 53.40% from 50.60% in December. This represents expansion and higher than market expectations of 52.00%. The January Manufacturing PMI increased to 49.10% from December’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.
  • January non-farm employment increased by 353,000 jobs, and the unemployment rate remained unchanged at 3.7%, as reported by the Bureau of Labor Statistics on February 2. In January, employment increased in professional and business services, health care, retail trade and social assistance. Average Hourly Earnings (wages) increased by 4.5% year-over-year in January.

PERFORMANCE UPDATES

  • The Total Equity Fund increased +0.11% in January and YTD. The International Equity Fund decreased -1.17% in January and YTD. The Small Cap Equity Fund decreased -2.18% in January and YTD. The Fixed Income Fund decreased -0.18% in January and YTD.
  • Equity managers’ performance was strong during the month, and nearly all managers, including PGIM’s domestic quantitative strategy, PGIM’s global quantitative strategy, Xponance, Channing. Westfield, Blackrock, Ballie Gifford and LSV, outperformed their respective benchmarks; only RBC underperformed its benchmark.
  • The UCF Balanced Fund, UCF’s most popular fund, slightly underperformed its benchmark, returning +0.01% in January and YTD. The Alternatives Balanced Fund increased +0.37% in January and YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning +0.86% in January and YTD.