MARKETS

  • Global financial markets continued to move in a positive direction in June, with the S&P 500 having the biggest quarterly gain since 1998. The markets remain volatile due to uncertainty around the coronavirus outbreak. The developed and emerging market equity index (MSCI ACWI IMI) increased 3.20% in June and is down -6.25% YTD. The S&P 500, which tracks large cap U.S. stocks, was up 1.99% in June and is down -3.08% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased 3.53% in June and is down -12.98% YTD. The International developed equity index (MSCI EAFE) increased 3.40% in June and is down –11.34% YTD. The emerging markets index (MSCI EM) increased 7.35% in June and is down –9.78% YTD.
  • In June, longer-term bond yields were mixed; the 30-year U.S. Treasury bond yield remained unchanged at 1.41%; the 10-year yield increased by 1 bps to 0.66%; and the 5-year yield decreased by 1 bps to 0.29% as of June 30, 2020.
  • The Barclays Aggregate Index, which is a measure of U.S. Bond prices, increased 0.63% for June and is up 6.14% YTD.

ECONOMIC AND GEOPOLITICAL HEADLINES

  • U.S. gross domestic product (GDP) in the first quarter of 2020 decreased -5.00%, according to the “Third” estimate released by the Bureau of Economic Analysis. GDP in the fourth quarter of 2019 increased 2.1%.
  • The June Non-Manufacturing Purchasing Managers Index (PMI) increased to 57.10% from 45.40% in May, which represents expansion after two consecutive months of contraction in the non-manufacturing sector. This exceeded expectations of 50.10%. The June Manufacturing PMI increased to 52.60% from May’s 43.10%, representing a second month of growth after one month of contraction. Per the Institute for Supply Management (ISM), a reading below 50 is considered economic contraction.
  • June non-farm employment increased by 4.8 million jobs, and the unemployment rate declined to 11.1%, as reported by the Bureau of Labor Statistics on July 2, 2020. In June, employment rose sharply in leisure and hospitality, construction, education and health services and retail trade. Average Hourly Earnings (wages) increased 5% year-over-year in June.

FUND PERFORMANCE UPDATES

  • In June, the Equity Fund increased by 3.29% and is down -7.83% YTD. The International Equity Fund increased by 4.51% in June and is down -9.39% YTD. The Small Cap Equity Fund increased by 3.13% in June and is down -9.68% YTD. The Fixed Income Fund increased by 0.87% in June and is up 4.59% YTD.
  • All UCF equity managers had positive absolute returns, and relative returns were mixed in June. Managers that outperformed included Quantitative Management Associates (QMA) (U.S. Large Cap and Beyond Fossil Fuels Global), BlackRock (Small Cap), and Baillie Gifford (International). Managers that underperformed included Fiduciary (Large Cap); Westfield, Dimensional Fund Advisors (DFA) and Fiduciary (Small Cap); LSV (International) and RBC (Emerging Markets).
  • Most Balanced Funds were ahead of their respective benchmarks in June except the Conservative Balanced Fund and Alternatives Balanced Fund. The Moderate Balanced Fund, UCF’s most popular fund, increased by 2.33% in June, and is down -2.57% YTD. The Aggressive Balanced Fund was up 2.70% in June and is down -4.78% YTD. The Conservative Balanced Fund was up 1.68% in June and is down -0.09% YTD. The Alternatives Balanced Fund was up 1.88% in June and is down -3.23% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by 2.62% in June and is down -0.35% YTD.