MARKETS
- Developed markets across the globe rebounded positively in July, led by the U.S, as the Federal Reserve signaled that the pace of rate increases might slow down, and second-quarter earnings were better than expected. However, emerging markets were negative mainly due to weakness in China. The developed and emerging market equity index (MSCI ACWI IMI) increased +6.98% in July and was down -14.61% The S&P 500, which tracks large cap U.S. stocks, increased +9.22% in July and was down -12.58% YTD. The Russell 2000 Index, which tracks domestic small cap stocks increased +10.44% in July and was down -15.43% YTD. The international developed equity index (MSCI EAFE) increased by +4.98% in July and was down -15.56% YTD. The emerging markets index (MSCI EM) decreased by -0.25% in July and was down -17.83% YTD.
- In July, longer-term bond yields decreased: the 30-year U.S. Treasury bond yield decreased by ‑14 bps to 3.00%, the 10-year yield decreased by -31 bps to 2.67%, and the 5-year yield decreased by -31 bps to 2.70%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased by +2.44% in July and was down -8.16%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2022 decreased by -0.9%, according to the “Advanced” estimate released by the Bureau of Economic Analysis. In the first quarter of 2022, GDP decreased by -1.6%.
- The July Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 56.70% from 55.30% in June, which represents expansion at a higher rate and higher than market expectations of 53.50%. The July’s Manufacturing PMI decreased to 52.80% from June’s 53.00%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- July’s non-farm employment increased by 528,000 jobs, and the unemployment rate came down to 3.5%, as reported by the Bureau of Labor Statistics on August 5. In July, employment increased in leisure and hospitality, professional and business services and health care. Average Hourly Earnings (wages) increased +5.2% year-over-year in July.
PERFORMANCE UPDATES
- In July, the Total Equity Fund increased by +7.68% and was down -16.17% YTD. The International Equity Fund increased +5.25% in July and was down -20.56% YTD. The Small Cap Equity Fund increased +9.52% in July and was down -15.80% YTD. The Fixed Income Fund increased +2.04% in July and was down -8.69% YTD.
- Equity managers’ performance was mixed in the month of July. The managers that outperformed their benchmarks were SSGA, Westfield, Blackrock and Baillie Gifford, whereas managers that underperformed their benchmarks were PGIM (formerly QMA), Channing, LSV and RBC.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), UCF’s most popular fund, outperformed its benchmark and increased by +5.26% in July; it was down -12.94% YTD. The Alternatives Balanced Fund increased by +4.25% in July and was down -9.08% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, increasing +5.21% in July; it was down -11.98% YTD.