- Global financial markets were positive in May across the board. The developed and emerging market equity index (MSCI ACWI IMI) increased +1.56% in May and +10.84% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +0.70% in May and +12.62% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +0.21% in May and +15.30% YTD. The international developed equity index (MSCI EAFE) increased by +3.26% in May and +10.07% YTD. The emerging markets index (MSCI EM) increased by +2.32% in May and was up +7.26% YTD.
- In May, longer-term bond yields decreased: the 30-year U.S. Treasury bond yield decreased by -4 bps to +2.26%; the 10-year yield decreased by -7 bps to +1.58%; and the 5-year yield decreased by -7 bps to +0.79%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, increased by +33% in May and decreased by -2.29% YTD.
ECONOMIC AND GEOPOLITIC2AL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2021 increased +6.4%, according to the “second” estimate released by the Bureau of Economic Analysis. The fourth quarter of 2020 GDP increased by +4.3%.
- The May Services PMI (formerly Non-Manufacturing Purchasing Manager Index) increased to 64.00% from 62.70% in April, which represents expansion at a higher rate and above the market expectations of 63.00%. The May Manufacturing PMI increased to 61.20% from April’s 60.70%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- The May Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 64.00% from 62.70% in April, this represents expansion at a higher rate and above the market expectations of 63.00%. The May Manufacturing PMI increased to 61.20% from April’s 60.70%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- May non-farm employment increased by 559,000 jobs, and the unemployment rate declined to 5.8%, as reported by the Bureau of Labor Statistics on June 4, 2021. The number was below the consensus estimate of adding 671,000 jobs. There was also a labor shortage during the month, given generous unemployment benefits and continued fears around the Coronavirus. In May, employment increased in leisure and hospitality, in public and private education and in health care and social assistance. Average Hourly Earnings (wages) increased +2.0% year-over-year in May.
FUND PERFORMANCE UPDATES
- In May, the Total Equity Fund increased by +1.30% and was up +11.56% YTD. The International Equity Fund increased by +2.33% in May and was up +9.34% YTD. The Small Cap Equity Fund decreased by -0.55% in May and was up +13.45% YTD. The Fixed Income Fund increased by +0.48% in May and was down -1.90% YTD.
- The managers that underperformed the benchmark were Westfield Capital Management, Blackrock, Channing Capital Management, Baillie Gifford, RBC Emerging Market and QMA BFF.
- Among the Balanced Funds in May, the Alternatives Balanced Fund outperformed its benchmark. The Moderate Balanced Fund, UCF’s most popular fund, increased by +0.97% in May and was up +6.46% YTD. The Aggressive Balanced Fund was up +1.10% in May and was up +8.47% YTD. The Conservative Balanced Fund was up +0.78% in May and was up +3.12% YTD. The Alternatives Balanced Fund was up +1.12% in May and was up +7.62% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +1.01% in May and was up +7.91% YTD.