MARKETS:
- Global equity markets continued the positive rally from the previous month, as the softer inflation data and resilient labor market continued to support the soft-landing narrative, though performance across markets varied substantially. The global equity index (MSCI ACWI IMI) increased +2.23% in June and was up +11.30% YTD. The S&P 500, which tracks large cap U.S. stocks, increased +3.59% in June and was up +15.29% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –0.93% in June and was up +1.73% YTD. The international developed equity index (MSCI EAFE) decreased -1.61% in June and was up +5.34% YTD. The emerging markets index (MSCI EM) increased +3.94% in June and was up +7.49% YTD.
- In June, bond yields decreased across maturities. The 30-year U.S. Treasury bond yield decreased by –14 bps to 4.51%; the 10-year yield decreased -15 bps to 4.36%; and the 2-year yield decreased -18 bps to 4.71%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased +0.95% in June and was down -0.71%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2024 increased +1.4%, according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, GDP increased +3.4%.
- The June Services PMI decreased to 48.80% from 53.80% in May. This represents contraction and is lower than market expectations of 52.50%. The June Manufacturing PMI decreased to 48.50% from May’s 48.70%. 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 206,000 jobs, and the unemployment rate increased to 4.1%, as reported by the Bureau of Labor Statistics on July 5. In June, employment increased in government, health care, social assistance and construction. Average Hourly Earnings (wages) increased +3.9% year-over-year in June.
PERFORMANCE UPDATES
- The Total Equity Fund increased +1.13% in June and was up +9.35% YTD. The International Equity Fund decreased -1.20% in June and was up +4.16% YTD. The Small Cap Equity Fund decreased -1.43% in June and was up +2.42% YTD. The Fixed Income Fund increased +0.93% in June and was down -0.33% YTD.
- Equity managers’ performance was mixed during the month, and the managers that outperformed their respective indices included PGIM’s domestic quantitative strategy, Xponance and Westfield, while the managers that underperformed their benchmarks included PGIM’s international quantitative strategy, Channing, Blackrock, Ballie Gifford, LSV and RBC.
- The UCF Balanced Fund, UCF’s most popular fund, underperformed its benchmark, returning +1.02% in June, and was up 5.62% YTD. The Alternatives Balanced Fund increased +0.35% in June and was up 6.64% YTD. Finally, the Beyond Fossil Fuels Balanced Fund underperformed its benchmark, returning +1.35% in June, and was up 8.67% YTD.