- Global financial markets continued to be positive in July led by emerging markets. That is against a backdrop of continued economic uncertainty due to the coronavirus outbreak. The developed and emerging market equity index (MSCI ACWI IMI) increased +5.29% in July and is down -1.29% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +5.64% in July and is up +2.38% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +2.77% in July and is down -10.57% YTD. The International developed equity index (MSCI EAFE) increased +2.33% in July and is down –9.28% YTD. The emerging markets index (MSCI EM) increased +8.94% in July and is down –1.72% YTD.
- In July, longer-term bond yields decreased: the 30-year U.S. Treasury bond yield decreased by ‑21 bps to +1.20%, the 10-year yield decreased by -11 bps to +0.55%, and the 5-year yield decreased by –6 bps to +0.23% as of June 30, 2020.
- The Barclays Aggregate Index, which is a measure of U.S. bond prices, increased +49% for July and is up +7.72% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2020 decreased -32.9%, according to the “Advance” estimate released by the Bureau of Economic Analysis. First quarter 2020 GDP decreased -5.0%.
- The July Non-Manufacturing Purchasing Managers Index (PMI) increased to 58.10% from 57.10% in June, which represents expansion and was above expectations of 55.00%. The July Manufacturing PMI increased to 54.20% from June’s 52.60%. Per the Institute for Supply Management (ISM), a reading below 50 is considered economic contraction.
- July non-farm employment increased by 1.8 million jobs and the unemployment rate declined to 10.2%, as reported by the Bureau of Labor Statistics on August 7, 2020. In July, employment rose sharply in leisure and hospitality, health services, retail trade, government and professional and business services. Average Hourly Earnings (wages) increased 4.8% year-over-year in July.
FUND PERFORMANCE UPDATES
- In July, the Equity Fund increased by 5.03% and is down -3.20% YTD. The International Equity Fund increased by 5.10% in July and is down -4.76% YTD. The Small Cap Equity Fund increased by 3.14% in July and is down -6.85% YTD. The Fixed Income Fund increased by 1.72% in July and is up 6.39% YTD.
- All UCF equity managers had positive absolute returns, and relative returns were mixed in July. Managers that outperformed included Westfield Capital Management Small Cap, DFA Small Cap and Baillie Gifford International.
- Balanced funds that were ahead of their respective benchmarks in July were BFF Balanced Fund and Alternatives Balanced Fund. The Moderate Balanced Fund, UCF’s most popular fund, increased by 3.63% in July and is up 0.97% YTD. The Aggressive Balanced Fund was up 4.16% in July and was down -0.82% YTD. The Conservative Balanced Fund was up 2.87% in July and is up 2.77% YTD. The Alternatives Balanced Fund was up 3.75% in July and is up 0.40% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by 4.73% in July and is up 4.36% YTD.