MARKETS
- Markets across the globe, except emerging markets which was dragged down by China, rebounded strongly in October. The developed and emerging market equity index (MSCI ACWI IMI) increased +6.03% in October and was down -21.14% The S&P 500, which tracks large cap U.S. stocks, increased +8.10% in October and was down -17.70% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +11.01% in October and was down -16.86% YTD. The international developed equity index (MSCI EAFE) increased +5.38% in October and was down -23.17% YTD. The emerging markets index (MSCI EM) decreased –3.10% in October and was down -29.42% YTD.
- In October, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by +43 bps to +4.22%, the 10-year yield increased by +27 bps to +4.10%, and the 5-year yield increased by +21 bps to +4.27%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased ‑1.30% in October and was down -15.72% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2022 increased +2.6%, according to the “Advanced” estimate released by the Bureau of Economic Analysis. In the second quarter of 2022 GDP decreased -0.6%.
- The October Services PMI (formerly Non-Manufacturing Purchasing Managers Index) decreased to 54.40% from 56.70% in September. This represents expansion at a lower rate and lower than market expectations of 55.50%. The October’s Manufacturing PMI decreased to 50.20% from September’s 50.90%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- October’s non-farm employment increased by 261,000 jobs, and the unemployment rate increased to 3.7%, as reported by the Bureau of Labor Statistics on November 4, 2022. In October, employment increased in health care, professional and technical services, as well as manufacturing. Average Hourly Earnings (wages) increased +4.7% year-over-year in October.
PERFORMANCE UPDATES
- In October, the Total Equity Fund increased +6.26% and was down -22.93% YTD. The International Equity Fund increased +2.88% in October and was down -30.17% YTD. The Small Cap Equity Fund increased +10.22% in October and was down -18.16% YTD. The Fixed Income Fund decreased -1.29% in October and was down -15.49% YTD.
- Equity manager performance versus their respective benchmarks was mixed during the month. The equity managers that outperformed included international manager LSV, emerging markets manager RBC, and global manager PGIM Quantitative (Beyond Fossils Fuel Fund).
- The UCF Balanced Fund (formerly Moderate Balanced Fund), UCF’s most popular fund, underperformed its benchmark but had positive absolute performance of +3.21% in October and was down -19.39% YTD. The Alternatives Balanced Fund increased +2.88% in October and was down -13.19% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, increasing +3.92% in October and was down -17.83% YTD.