Following is a summary of the markets and our funds’ performance for the month of October 2017, provided by our Chief Investment Strategist David Klassen.
- Global financial markets gained in October, led by gains in large-cap Technology and Oil. The S&P 500, which tracks large-cap U.S. stocks, increased 2.33% in October, and is up 16.91% Y-T-D. The Russell 2000 Index, which tracks domestic small-cap stocks, was up 0.85%, and is up 11.89% Y-T-D. The international developed equity index (MSCI EAFE) was up 1.52% in October, and is up 21.78% Y-T-D. The emerging markets index (MSCI EM), the best performing asset class year-to-date, was up 3.51% in October and is up 32.26% Y-T-D.
- In October, the bond yield curve flattened; the 30-year U.S. Treasury bond yield increased 2bps to 2.88%, while the 10-year yield increased 5bps to 2.38%, and the 5-year yield increased 8bps to 2.02%.
- Corporate bond prices, as measured by Barclays Aggregate Index were up 06% for October, and are up 3.20%Y-T-D.
ECONOMIC & GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP), in the third quarter of 2017, increased 3.0%, according to the “advanced” estimates released by the Bureau of Economic Analysis. Second quarter 2017 GDP increased 3.01%.
- U.S. manufacturing grew at a slower pace in October. The October the Purchasing Managers Index (PMI) registered 58.7, 2.1 percentage points below September reading of 60.8 and the highest reading since May 2004. Per the Institute for Supply Management, a reading above 50 is considered economic expansion.
- In October, non-farm employment added 261,000 jobs in October, as the country recovers from the impact of Hurricanes Irma and Harvey. Economists expected an increase of 310,000. August and September job gains were revised by a combined 90,000 more than previously reported. After revisions, Job gains have averaged 162,000 over the past three months. The unemployment rate ticked down slightly to 4.1%.
- The Total Equity Fund was up 1.81% for October, and its Y-T-D return is 20.58%. The International Equity Fund was up 1.83% for October, and its Y-T-D return is 26.63%. The Small Cap Equity Fund was down 1.04% for October and its Y-T-D return is 11.20%. In October, net of fees, the Fixed Income Fund was up 0.07%, and its Y-T-D return is 3.51%.
- The UCF equity managers’ performances relative to their respective benchmarks were mixed for October. International manager Baillie Gifford outperformed its benchmark, while LSV and Oaktree lagged their respective benchmarks. Domestic Core equity managers QMA and State Street outperformed, while FMI lagged its benchmark in October. Small cap manager DFA outperformed its benchmark, while Westfield and FMI trailed their respective benchmarks in October.
- The Moderate Balanced Fund, in October, was up 1.09%, and is up 12.74% Y-T-D. The Aggressive Balanced Fund was up 1.35% in October, and has a return of 15.45% Y-T-D. The Conservative Balanced Fund was up 0.67% in October, and is up 8.59% Y-T-D. The Alternatives Balanced Fund was up 1.86% in October, and has a return of 12.21% Y-T-D. The Beyond Fossil Fuels Balanced Fund was up 1.41% for October, and is up 13.95% Y-T-D.