- Markets across the globe contracted as central banks became hawkish, including the Fed, which increased rates by 75 bps, and investors evaluated risks around inflation, corporate earnings, rates, economic data and geopolitical factors. The developed and emerging market equity index (MSCI ACWI IMI) decreased -8.43% in June and was down -20.18% The S&P 500, which tracks large cap U.S. stocks, decreased -8.25% in June and was down -19.96% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased -8.22% in June and was down ‑23.43% YTD. The international developed equity index (MSCI EAFE) decreased -9.28% in June and was down -19.57% YTD. The emerging markets index (MSCI EM) decreased -6.64% in June and was down -17.63% YTD.
- In June, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +7 bps to 3.14%; the 10-year yield decreased by +13 bps to 2.98%, and the 5-year yield increased by +20 bps to 3.01%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -1.57% in June and was down -10.35%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2022 decreased by -1.6%, according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2021, GDP increased by +6.9%.
- The June Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 55.30% from 56.90% in May, which represents expansion at a lower rate and higher than market expectations of 54.30%. The June’s Manufacturing PMI increased to 53.00% from May’s 56.10%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- June’s non-farm employment increased by 372,000 jobs, and the unemployment rate stayed the same at 3.6%, as reported by the Bureau of Labor Statistics on July 8. In June, employment increased in leisure and hospitality, professional and business services, and health care. Average Hourly Earnings (wages) increased +5.1% year-over-year in June.
- In June, the Total Equity Fund decreased -8.73% and -22.14% YTD. The International Equity Fund decreased -8.84% in June and -24.53% YTD. The Small Cap Equity Fund decreased -8.97% in June and -23.12% YTD. The Fixed Income Fund decreased ‑1.93% in June and -10.52% YTD.
- Most equity managers underperformed against their benchmarks in June. A manager that outperformed its benchmark was RBC, whereas managers that underperformed benchmarks were Westfield, PGIM (formerly QMA), SSGA, Channing, LSV, Blackrock and Baillie Gifford.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), UCF’s most popular fund, slightly underperformed its benchmark, and decreased -5.97% in June and -17.29% YTD. The Alternatives Balanced Fund decreased -5.20% in June and -12.78% YTD. Finally, the Beyond Fossil Fuels Balanced Fund underperformed its benchmark, decreasing -6.68% in June and -16.33% YTD.