- Global financial markets had negative performance in September. The developed and emerging market equity index (MSCI ACWI IMI) decreased -4.13% in September and was up +11.12% YTD. The S&P 500, which tracks large cap U.S. stocks, was down -4.65% in September and up +15.92% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, decreased –2.95% in September and was at +12.41% YTD. The international developed equity index (MSCI EAFE) decreased by -2.90% in September and increased +8.35% YTD. The emerging markets index (MSCI EM) decreased by -3.97% in September and decreased -1.25% YTD.
- In September, longer-term bond yields increased: the 30-year U.S. Treasury bond yield increased by 16 bps to +2.08%; the 10-year yield increased by 22 bps to +1.52%; and the 5-year yield increased by 21 bps to +0.98%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased by -0.87% in September and -1.55% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the second quarter of 2021 increased +6.7%, according to the “Third” estimate released by the Bureau of Economic Analysis. The first quarter of 2021 GDP increased by +6.3%.
- The September Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 61.90% from 61.70% in August, which represents expansion at a higher rate and above the market expectations of 60.00%. The September Manufacturing PMI increased to 61.10% from August’s 59.90%. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion.
- September non-farm employment increased by 194,000 jobs, and the unemployment rate decreased to 4.8%, as reported by the Bureau of Labor Statistics on October 8. In September, employment increased in leisure and hospitality, professional and business services and retail trade, as well as transportation and warehousing. Average Hourly Earnings (wages) increased +4.6% year-over-year in September.
FUND PERFORMANCE UPDATES
- In September, the Total Equity Fund decreased by -4.33% and was up +10.66% YTD. The International Equity Fund decreased by -4.19% in September and was up +5.20% YTD. The Small Cap Equity Fund decreased by -3.49% in September and was up +10.05% YTD. The Fixed Income Fund decreased by -0.92% in September and was down -1.51% YTD.
- The equity managers that outperformed their respective benchmarks in September were QMA, SSGA and LSV. The managers that underperformed the benchmarks in September were Blackrock, Channing, RBC, Westfield and Baillie Gifford.
- All the Balanced Funds underperformed their benchmarks. The Moderate Balanced Fund, UCF’s most popular fund, decreased by -3.09% in September and was up +6.00% YTD. The Aggressive Balanced Fund was down -3.58% in September and up +7.81% YTD. The Conservative Balanced Fund was down -2.26% in September and up +2.98% YTD. The Alternatives Balanced Fund was down -2.49% in September and up +7.54% YTD. Finally, the Beyond Fossil Fuels Balanced Fund decreased by -3.29% in September and was up +8.34% YTD.