MARKETS:
- Global equity markets rallied in June, as macro-economic fundamentals remained strong despite tight monetary policy in the U.S. and other parts of the world. The global equity index (MSCI ACWI IMI) increased +5.81% in June and was up +13.93% The S&P 500, which tracks large cap U.S. stocks, increased +6.61% in June and was up +16.89% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +8.13% in June and was up +8.09% YTD. The international developed equity index (MSCI EAFE) increased +4.55% in June and was up +11.67% YTD. And the emerging markets index (MSCI EM) increased +3.80% in June and was up +4.89% YTD.
- In June, short-term bond yields increased more than long-term yields while exhibiting intra-month volatility: the 30-year U.S. Treasury bond yield remained unchanged at 3.85%; the 10-year yield increased +17 bps to 3.81%; and the 2-year yield increased +47 bps to 4.87%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased -0.36% in June and was up +2.09%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2023 increased +2.0%, according to the “Third” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2022, GDP increased +2.6%.
- The June Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 53.90% from 50.30% in May, representing expansion and higher-than-market expectations of 51.00%. The June Manufacturing PMI decreased to 46.00% from May’s 46.90%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
- June non-farm employment increased by 209,000 jobs, and the unemployment rate decreased to 3.6%, as reported by the Bureau of Labor Statistics on July 7. In June, employment increased in government, health care, construction and social assistance. Average Hourly Earnings (wages) increased +4.4% year-over-year in June.
UCF FUND PERFORMANCE UPDATES
- The Total Equity Fund increased +6.24% in June and was up 13.15% YTD. The International Equity Fund increased +4.92% in June and was up +9.57% YTD. The Small Cap Equity Fund increased +8.74% in June and was up +10.16% YTD. The Fixed Income Fund decreased -0.15% in June and was up +2.43% YTD.
- Equity managers’ performance was strong during the month, and the managers that outperformed their respective benchmarks were Blackrock, Channing, LSV, RBC and both PGIM’s quantitative strategies, whereas the managers that underperformed were Xponance, Westfield and Ballie Gifford.
- The UCF Balanced Fund, UCF’s most popular fund, outperformed its benchmark, returning +3.78% in June, and was up +8.80% YTD. The Alternatives Balanced Fund increased +2.98% in June and was up +6.69% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning +4.38% in June and was up +9.59% YTD.