MARKETS:
- Global equity markets did not exhibit strong conviction in any direction but were slightly negative as measured by MSCI ACWI IMI. The global equity index (MSCI ACWI IMI) decreased -1.07% in May and was up +7.68% YTD. The S&P 500, which tracks large cap U.S. stocks, increased +0.43% in May and was up +9.65% YTD. The Russell 2000 Index, which tracks domestic small cap stocks decreased -0.92% in May and was down –0.04% YTD. The international developed equity index (MSCI EAFE) decreased -4.23% in May and was up +6.81% YTD. The emerging markets index (MSCI EM) decreased -1.68% in May and was up +1.05% YTD.
- In May, bond yields increased while exhibiting intra-month volatility: the 30-year U.S. Treasury bond yield increased +18bps to 3.85%, the 10-year yield increased +20 bps to 3.64%, and the 2-year yield increased +36 bps to 4.40%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -1.09% in May and was up +2.46%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2023 increased +1.3%, according to the “Second” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2022, GDP increased by 2.6%.
- The May Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 50.30% from 51.90% in April, representing expansion but lower than market expectations of 52.20%. The May Manufacturing PMI decreased to 46.90% from April’s 47.10%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
- May non-farm employment increased by 339,000 jobs, and the unemployment rate increased to 3.7%, as reported by the Bureau of Labor Statistics on June 2. In May, employment increased in professional and business services, government, health care, transportation and warehousing and social assistance. Average Hourly Earnings (wages) increased +4.3% year-over-year in May.
PERFORMANCE UPDATES
- The Total Equity Fund decreased -1.32% in May and was up +6.50% YTD. The International Equity Fund decreased -3.77% in May and was up +4.43% YTD. The Small Cap Equity Fund decreased -0.82% in May and was up 1.31% YTD. The Fixed Income Fund decreased by -0.99% in May and was up +2.58% YTD.
- Equity managers’ performance was mixed during the month, and the managers that outperformed their respective benchmarks were Xponance, Westfield, Channing, Ballie Gifford and both PGIM’s quantitative strategies; whereas the managers that underperformed were Blackrock, LSV and RBC.
- The UCF Balanced Fund, UCF’s most popular fund, outperformed its benchmark, returning -1.16% in May and was up +4.84% YTD. The Alternatives Balanced Fund decreased -0.79% in May and was up +3.61% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning -0.76% in May and was up +4.99% YTD.