- Global financial markets were mixed in October due to concerns regarding lofty valuations, delays in a stimulus package and the approaching U.S. election. The developed and emerging market equity index (MSCI ACWI IMI) decreased -2.43% in October and is down –1.09% YTD. The S&P 500, which tracks large cap U.S. stocks, was down -2.66% in October and is up +2.77% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +2.09% in October and is down -6.77% YTD. The international developed equity index (MSCI EAFE) decreased -3.99% in October and is down –10.80% YTD. The emerging markets index (MSCI EM) increased +2.06% in October and is up +0.87% YTD.
- In October, longer-term bond yields increased; the 30-year U.S. Treasury bond yield increased by 19 bps to +1.65%; the 10-year yield increased by 19 bps to +0.88%; and the 5-year yield increased by 10 bps to +0.38%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. Bond prices, decreased -0.45% for October and is up +6.32% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2020 increased +33.1%, according to the “Advance” estimate released by the Bureau of Economic Analysis. The second quarter of 2020 GDP decreased -31.4%.
- The October Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 56.60% from 57.80% in September. This decrease represents expansion but was lower than market expectations of 57.50%. The October Manufacturing PMI increased to 59.30% from September’s 55.40%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- October non-farm employment increased by 638,000 jobs, and the unemployment rate declined to 6.9%, as reported by the Bureau of Labor Statistics on November 6, 2020. In October, employment rose due to the resumption of activity, especially in leisure and hospitality, professional and business services, retail trade and construction. Average Hourly Earnings (wages) increased +4.5% year-over-year in October.
FUND PERFORMANCE UPDATES
- In October, the Equity Fund decreased by -1.62% and is down -1.93% YTD. The International Equity Fund decreased by -1.39% in October and is down -2.87% YTD. The Small Cap Equity Fund increased by +1.87% in October and is down -2.27% YTD. The Fixed Income Fund decreased by ‑0.49% in October and is up +5.04% YTD.
- UCF equity managers had a mixed return in October. Managers that outperformed their benchmark included Quantitative Management, Westfield Capital Management, SSGA, Baillie Gifford and DFA.
- All Balanced Funds outperformed their respective benchmarks in October except for BFF Balanced Fund. The Moderate Balanced Fund, UCF’s most popular fund, decreased by -1.14% in October and is up +1.28% YTD. The Aggressive Balanced Fund was down -1.32% in October and is down -0.13% YTD. The Conservative Balanced Fund was down -0.87% in October and is up +2.42% YTD. The Alternatives Balanced Fund was down -0.68% in October and is up +1.37% YTD. Finally, the Beyond Fossil Fuels Balanced Fund decreased by -1.69% in October and is up +3.30% YTD.