MARKETS
- Markets across the globe were more or less flat as volatility increased and investors re-evaluated risks around inflation, rates, economic data, supply chain and geopolitical risks. The developed and emerging market equity index (MSCI ACWI IMI) increased +0.12% in May and was down ‑12.83% YTD. The S&P 500, which tracks large cap U.S. stocks, increased +0.18% in May and was down -12.76% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +0.15% in May and was down -16.56% YTD. The international developed equity index (MSCI EAFE) increased +0.75% in May and was down -11.34% YTD. The emerging markets index (MSCI EM) increased +0.44% in May and was down -11.76% YTD.
- In May, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased +11 bps to 3.07%; the 10-year yield decreased -4 bps to 2.85%; and the 5-year yield decreased -11 bps to 2.81%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased +0.64% in May and was down -8.92%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2022 decreased -1.5%, according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2021, GDP increased 6.9%.
- The May Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 55.90% from 57.10% in April, which represents expansion at a lower rate and lower than market expectations of 56.40%. The May’s Manufacturing PMI increased to 56.10% from April’s 55.40%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- May’s non-farm employment increased by 390,000 jobs, and the unemployment rate stayed the same at 3.6%, as reported by the Bureau of Labor Statistics on June 3. In May, employment increased in leisure and hospitality, professional and business services, and in transportation and warehousing. Average Hourly Earnings (wages) increased 5.2% year-over-year in May.
PERFORMANCE UPDATES
- In May, the Total Equity Fund increased +0.33% and was down -14.69% YTD. The International Equity Fund increased +0.40% in May and was down -17.21% YTD. The Small Cap Equity Fund increased +0.24% in May and was down -15.55% YTD. The Fixed Income Fund decreased ‑0.06% in May and -8.76% YTD.
- Equity managers had mixed performance in the month of May. Managers that outperformed their benchmarks were PGIM (formerly QMA), SSGA, Channing, RBC and LSV; whereas managers that underperformed their benchmarks were Westfield, Blackrock and Baillie Gifford.
- The UCF Balanced Fund (formerly Moderate Balanced Fund), UCF’s most popular fund, outperformed its benchmark and increased +0.18% in May; it was down -12.04% YTD. The Alternatives Balanced Fund decreased -0.10% in May and -8.00% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, increasing +0.25% in May and was down ‑10.34% YTD.