MARKETS:
- Global equity market returns turned positive in May, as quarterly earnings came in stronger than expected and the AI (artificial intelligence) rally continued. The global equity index (MSCI ACWI IMI) increased +4.06% in May and was up +8.88% The S&P 500, which tracks large cap U.S. stocks, increased +4.96% in May and was up +11.30% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +5.02% in May and was up +2.68% YTD. The international developed equity index (MSCI EAFE) increased +3.87% in May and was up +7.07% YTD. The emerging markets index (MSCI EM) increased +0.56% in May and was up +3.41% YTD.
- In May, bond yields decreased across maturities. The 30-year U.S. Treasury bond yield decreased –14 bps to 65%, the 10-year yield decreased –18 bps to 4.51%, and the 2-year yield decreased –15 bps to 4.89%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased +1.70% in May and was down -1.64%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2024 increased +1.3%, according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023 GDP increased +3.4%.
- The May Services PMI increased to 53.80% from 49.40% in April. This represents expansion and is higher than market expectations of 50.80%. The May Manufacturing PMI decreased to 48.70% from April’s 49.20%. 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 272,000 jobs, and the unemployment rate increased to 4.0%, as reported by the Bureau of Labor Statistics on June 7. In May, employment increased in health care, government, leisure and hospitality, and professional, scientific and technical services. Average Hourly Earnings (wages) increased +4.1% year-over-year in May.
PERFORMANCE UPDATES
- The Total Equity Fund increased +4.53% in May and was up 8.12% YTD. The International Equity Fund increased +4.17% in May and was up 5.43% YTD. The Small Cap Equity Fund increased +3.80% in May and was up 3.91% YTD. The Fixed Income Fund increased +1.53% in May and was down -1.25% YTD.
- Equity managers’ performance was strong during the month and the managers that outperformed or were flat to their respective indices included PGIM’s domestic and global quantitative strategies, Xponance, Blackrock, Ballie Gifford, LSV and RBC, while the managers that underperformed their benchmarks included Westfield and Channing.
- The UCF Balanced Fund, UCF’s most popular fund, outperformed its benchmark, returning +3.32% in May, and was up 4.56% YTD. The Alternatives Balanced Fund increased +2.33% in May and was up +6.27% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning +3.85% in May, and was up +7.23% YTD.