- Global financial markets had a mixed performance in July, with continued leadership from large companies in the U.S. The developed and emerging market equity index (MSCI ACWI IMI) increased +0.69% in July and +13.08% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +2.38% in July and +17.99% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –3.61% in July and increased +13.29% YTD. The international developed equity index (MSCI EAFE) increased by +0.75% in July and +9.65% YTD. The emerging markets index (MSCI EM) decreased by -6.73% in July and increased +0.22% YTD.
- In July, longer-term bond yields decreased: the 30-year U.S. Treasury bond yield decreased by –17 bps to 1.89%, the 10-year yield decreased by 21 bps to 1.24%; and the 5-year yield decreased by 18 bps to 0.69%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, increased by +1.12% in July and decreased by -0.50% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2021 increased +6.5%, according to the “Advance” estimate released by the Bureau of Economic Analysis. The first quarter of 2021 GDP increased by +6.3%.
- The July Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 64.10% from 60.10% in June, which represents expansion at a higher rate and above the market expectations of 60.50%. The July Manufacturing PMI decreased to 59.50% from June’s 60.60%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- July non-farm employment increased by 943,000 jobs, and the unemployment rate decreased to 5.4%, as reported by the Bureau of Labor Statistics on August 6, 2021. This was higher than consensus estimates of adding 865,000 jobs. In July, employment increased in leisure and hospitality, local government and education, as well as professional and business services. Average Hourly Earnings (wages) increased +4% year-over-year in July.
FUND PERFORMANCE UPDATES
- In July, the Total Equity Fund increased by +0.19% and was up +12.76% YTD. The International Equity Fund decreased by -1.51% in July and was up +7.50% YTD. The Small Cap Equity Fund decreased by -2.24% in July and was up +11.17% YTD. The Fixed Income Fund increased by +0.77% in July and was down -0.45% YTD.
- All the equity managers outperformed their respective benchmarks except for BlackRock Small Cap, which slightly underperformed the benchmark in July.
- The Balanced Funds that outperformed their benchmarks were the BFF Balanced Fund and Alternatives Balanced Fund, while the Conservative Balanced Fund, Moderate Balanced Fund and Aggressive Balanced Fund underperformed. The Moderate Balanced Fund, UCF’s most popular fund, increased by +0.35% in July and +7.64% YTD. The Aggressive Balanced Fund was up +0.28% in July and +9.63% YTD. The Conservative Balanced Fund was up +0.50% in July and +4.39% YTD. The Alternatives Balanced Fund was up +0.79% in July and +8.82% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +1.33% in July and +10.13% YTD.