MARKETS
- Global financial markets were up in November as prospects for a vaccine improved and uncertainty regarding the U.S presidential elections reduced. The developed and emerging market equity index (MSCI ACWI IMI) increased +12.33% in November and is up +11.10% YTD. The S&P 500, which tracks large cap U.S. stocks, was up +10.95% in November and is up +14.02% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +18.43% in November and is up +10.41% YTD. The International developed equity index (MSCI EAFE) increased +15.50% in November and is up +3.03% YTD. The emerging markets index (MSCI EM) increased +9.25% in November and is up +10.20% YTD.
- In November, longer-term bond yields decreased; the 30-year U.S. Treasury bond yield decreased by -7 bps to 1.58%, the 10-year yield decreased by -4 bps to 0.84% and the 5-year yield decreased by -2 bps to 0.36%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, increased +0.98% for November and is up +7.36% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2020 increased +33.1%, according to the “second” estimate released by the Bureau of Economic Analysis. The second quarter of 2020 GDP decreased -31.4%.
- The November Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 55.90% from 56.60% in October, which represents expansion but slightly lower-than-market expectations of 56%. The November Manufacturing PMI decreased to 57.50% from October’s 59.30%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- November non-farm employment increased by 245,000 jobs, and the unemployment rate declined to 6.7%, as reported by the Bureau of Labor Statistics on December 4, 2020. In November employment rose due to the resumption of activity, especially in transportation and warehousing, professional and business services and health care. Average Hourly Earnings (wages) increased +4.4% year-over-year in November.
FUND PERFORMANCE UPDATES
- In November, the Equity Fund increased by +12.07% and is up +9.91% YTD. The International Equity Fund increased by +13.52% in November and is up +10.25% YTD. The Small Cap Equity Fund increased by +14.35% in November and is up +11.75% YTD. The Fixed Income Fund increased by +1.45% in November and is up +6.56% YTD.
- All UCF equity managers had an absolute positive return in November. LSV, a deep value manager, outperformed significantly, while other managers slightly underperformed.
- All Balanced Funds had strong absolute positive returns but underperformed their respective benchmarks in November. The Moderate Balanced Fund, UCF’s most popular fund, increased by +7.74% in November, and is up +9.12% YTD. The Aggressive Balanced Fund was up +9.37% in November and is up +9.23% YTD. The Conservative Balanced Fund was up +5.13% in November and is up +7.68% YTD. The Alternatives Balanced Fund was up +6.82% in November and is up +8.29% YTD. Finally, the Beyond Fossil Fuels Balanced Fund increased by +6.68% in November and is up +10.20% YTD.