October 2019 Investment Report
[Pages:9]October 2019 Investment Report
Highlights
The Federal Reserve (Fed) cut its policy rate by 25 basis points for the third time in 2019. Fed chair Jerome Powell labeled this a cautionary measure and signaled a pause on future rate reductions, barring a serious slowdown in economic activity or significant increase in inflation from the 2% target.
Trade tensions between the U.S. and China continued to fuel uncertainty and dampen global business sentiment. The signing of a Phase I "mini" deal at the Asia-Pacific Economic Cooperation (APEC) summit in Chile was delayed following the cancellation of APEC due to civil unrest and protests against inequality.
In October, MAF outperformed its benchmark. IEF, IPF and FIF outperformed their respective benchmarks, while USEF was the only fund that underperformed its benchmark.
Monthly Overview
Longevity of U.S. expansion
The Bureau of Economic Analysis' advanced estimate showed U.S. GDP rose by 1.9% in the third quarter, beating analyst estimates of 1.6% on the back of strong consumer confidence. This marked 124 consecutive months of economic growth--the longest economic expansion in U.S. history. The Bureau of Labor Statistics (BLS) reported that non-farm payrolls grew by 128,000 in October despite the General Motors strike, representing a record 109 straight months of job growth. This result exceeded the consensus of economists' estimates. The BLS also revised its August and September job figures higher. The unemployment rate rose to 3.6%, a 0.1% increase from the previous month, as more participants joined the labor pool. Consumer spending, government spending, home sales and employment remained strong and continued to sustain the economy. However, a survey of corporate CEO's reported weak sentiment, reflecting anemic business spending in the midst of ongoing global trade uncertainty.
Fed buys Treasuries, but it is not QE
A cash shortage in September highlighted the need for additional liquidity in the financial system. In response, the Fed announced it would expand its asset holdings with regular purchases of short-term Treasury securities--about $60B per month--over the next several months, adjusting "as necessary over time." While this amount is similar to previous rounds of quantitative easing (QE) stimulus, Fed officials stressed the aim is not to affect long-term interest rates or encourage economic activity (which is the goal of QE), but to fix what a Federal Reserve president called a "plumbing issue" to ensure an adequate supply of liquidity for financial markets to function smoothly.
Brexit delayed and ECB President Draghi steps down
Just days ahead of an October 31 deadline for Brexit, the European Union granted the U.K. an extension to January 31, 2020. The U.K. will hold a general election on December 12--the outcome of which will determine the path of deal or no deal (or renegotiation or referendum). The European Central Bank (ECB) kept rates unchanged at its October meeting. As planned, former International Monetary Fund chair Christine Lagarde replaced Mario Draghi, who finished his distinguished term as ECB president on November 1.
Source: New York Times
a general agency of The United Methodist Church
October 2019 Investment Report
Market Performance
January 2018 Investment Report
Page 2 of 9 Page 2 of 9
Stocks
Russell 3000 Index S&P 500 Index
Russell 2000 Index MSCI AC World Index Ex U.S. IMI
MSCI EAFE Index MSCI Emerging Market IMI Index
Bonds
Barclays U.S. Treasury Index Barclays U.S. Credit Index
Barclays U.S. Corp High Yield Index
2.15% 2.17% 2.63%
3.56% 3.59%
4.18%
9.83%
17.18% 15.35%
16.86%
22.68% 23.16%
0.07% 0.57% 0.28%
7.78% 13.26%
11.71%
Currencies
U.S. Dollar Index British pound vs USD
Euro vs USD Japanese yen vs USD
-2.04%
-2.41% -0.03%
1.23% 5.01%
1.60% 2.33%
1.49%
Commodities
Bloomberg Commodity Index -10.0% -5.0%
0.0%
2.02% 5.22%
5.0% 10.0%
15.0%
20.0%
25.0%
Source: FactSet, as of October 31, 2019
MTD YTD
October 2019 Investment Report
January 2018 Investment Report
Page 3 of 9 Page 3 of 9
Key Monthly Economic Statistics
The unemployment rate ticked up slightly in 7% October, and wage growth remained muted.
5%
3% Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
4%
Oct. 3.0%
2%
Oct. 3.6%
0% Oct-19
Year-over-year CPI and PCE were stable in
3.5% September and remained below the Feds 2% target.
3.0%
2.5%
Sep.
2.0%
1.7%
1.5%
1.0%
Sep.
0.5% 0.0%
1.7%
-0.5%
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Unemployment Rate (Left)
Wage Growth (Y/Y Change) (Right)
CPI (Y/Y Change)
Core PCE (Y/Y change)
The advanced estimate of third quarter annual real 6% U.S. GDP growth was 1.9%.
3% 0% -3% -6% -9%
Sep. 1.9%
Consumer confidence and small business optimitism
140 softened.
130 120
120
Oct. 112150.9
110
100 90 80 Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
100
Sep. 101.8
90 Oct-19
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
7
US Real GDP (Q/Q)
Consumer Confidence (Left)
Small Business Optimism (Right)
Millions
U.S. housin6g starts declined 9% in September.
August annual home price growth was unchanged.
8%
5
1,400
6%
4
1,300 Sep. 1,200 1,256
The Fed funds rate declined as a result of the
October rate cut, and the Trade Weighted Dollar
110 index was unchanged.
3%Oct.
107.1
100
2%
4%
3
1,100
2%
0% Sep-14
2 Sep-115
Sep-16
Sep-17
Sep-18
1,000
900 Aug. 800 2.0%
Sep-19
90
80 Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
1% Oct.
1.6%
0%
Oct-19
S&P/Case-Shiller 20 City Home Price (Y/Y change) (Left)
Real Trade Weighted U.S. Dollar Index (Left)
Housi0ng Starts, SAAR, (Thous Units) (Right)
Fed Funds Rate (Right)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Chart of Month Severely Cost-Burdened Moderately Cost-BurdeAngegdregate # of New Renter Households in the U.S.
Nearly half of U.S. renter households are cost burdened,
6
despite recordNlootwCuonsetm-Bpulordymeneendt and consistent but
modest wage growth.
4
Millions
Cost burdened households fell from 53.4% in 2011 to
49.7% in 2018; however, the number of cost-burdened
2
households has increased by 28M since 2008.
P Series funds invest in multifamily affordable housing to
0
benefit low-income households across the U.S. through the Positive Social Purpose Lending Program.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Not Cost-Burdened Moderately Cost-Burdened (spend over 30% of household income on rent)
Severely Cost-Burdened (spend over 50% of household income on rent)
Source: FactSet; United States Census Bureau, ACS, Apartment
October 2019 Investment Report
January 2018 Investment Report
Page 4 of 9 Page 4 of 9
Investment Fund Review (Net-of-Fees Performance)i
Equity Funds
U.S. Equity Fund
Fund
U.S. Equity Fund Russell 3000 Index Difference (percentage points)
October
+1.70% +2.15% -0.45
YTD
+21.39% +22.68%
-1.29
For the month, the fund's underweight allocation to strong performing large-cap growth-oriented company stocks, as well as investments in private equity, were the key detractors to benchmark-relative performance.
Year to date, the fund's strategic overweight to small- and mid-sized company stocks and corresponding underweight to large-company stocks, along with investments in alternatives, detracted from benchmark-relative performance. Conversely, the fund benefited from the majority of active managers outperforming their respective benchmarks.
International Equity Fund
Fund
International Equity Fund MSCI ACWI ex U.S. Investable Market Index (Net) Difference (percentage points)
October
+3.63% +3.56% +0.07
YTD
+17.25% +15.35%
+1.90
For the month, the strategic overweight to emerging market equities and corresponding underweight to developed economies, along with stocks excluded in compliance with Wespath's Exclusions policy (described here), positively contributed to benchmark-relative returns. Alternatively, dedicated allocations to alternatives and the fund's fair market valuation policy (described here) were negative contributors to relative returns.
Year to date, the fund most benefited from the majority of active managers outperforming their respective benchmarks. The strategic overweight to emerging market equities and corresponding underweight to developed economies, as well as investments in private equity and private real estate, detracted from relative performance.
October 2019 Investment Report
January 2018 Investment Report
Page 5 of 9 Page 5 of 9
U.S. Equity Index Fund
Fund
U.S. Equity Index Fund Russell 3000 Index Difference (percentage points)
October
+2.21% +2.15% +0.06
YTD
+22.49% +22.68%
-0.19
The U.S. Equity Index Fund is a passively managed fund designed to closely match the fund benchmark, less fees and expenses. Wespath's Exclusions policy (described here) positively impacted benchmarkrelative performance during the month but slightly detracted year to date.
Fixed Income Funds
Fixed Income Fund
Fund
Fixed Income Fund Barclays U.S. Universal (ex MBS) Index Difference (percentage points)
October
+0.46% +0.31% +0.15
YTD
+9.76% +10.13% -0.37
For the month, the allocation to emerging market bonds denominated in local currencies contributed positively to benchmark-relative performance as emerging market currencies appreciated relative to the dollar. Security selection decisions of the core-plus managers also helped relative results. The allocation to loans from the Positive Social Purpose Lending program detracted from benchmark-relative performance.
Year to date, exposure to multi-family housing through high-quality U.S. agency commercial mortgagebacked securities and the Positive Social Purpose Lending program detracted from benchmark-relative results. Exposure to euro-denominated bonds also detracted from benchmark-relative results as the European currency depreciated relative to the U.S. dollar. Security selection decisions of the core-plus managers helped relative results.
Extended Term Fixed Income Fund
Fund
Extended Term Fixed Income Fund Barclays U.S. Government/Credit Long Term Index Difference (percentage points)
October
+0.06% -0.06% +0.12
YTD
+14.66% +20.86%
-6.20
The fund's policy of maintaining a lower sensitivity to interest rate movements modestly contributed to benchmark-relative performance during the month but detracted from year-to-date relative results.
October 2019 Investment Report
January 2018 Investment Report
Page 6 of 9 Page 6 of 9
Inflation Protection Fund
Fund
October
YTD
Inflation Protection Fund IPF Benchmarkii
+0.59% -0.78%
+7.69% +9.53%
Difference (percentage points)
+1.37
-1.84
The fund's underweight exposure to U.K. inflation-linked securities and overweight to U.S. Treasury inflation-linked securities significantly contributed to benchmark-relative performance during the month but has detracted year to date.
Year to date, the fund's allocation to floating-rate, senior-secured bank loans detracted from benchmarkrelative performance amid declining short-term interest rates.
Balanced Fund
Multiple Asset Fund
Fund
Multiple Asset Fund MAF Benchmarkiii Difference (percentage points)
October
+1.85% +1.82% +0.03
YTD
+15.71% +16.16%
-0.45
During the month, the U.S. Equity Fund detracted from benchmark-relative performance, while the International Equity Fund, Fixed Income Fund and Inflation Protection Fund all positively contributed to relative performance.
Year to date, the International Equity Fund was the only fund that positively contributed to relative returns, which the U.S. Equity Fund, Fixed Income Fund, and Inflation Protected Fund negatively contributed to benchmark-relative performance.
Social Values Choice Suite of Funds
Social Values Choice Bond Fund
Fund
Social Values Choice Bond Fund Barclays U.S. Universal (ex MBS) Index Difference (percentage points)
October
+0.50% +0.31% +0.19
YTD
+10.14% +10.13%
+0.01
Asset manager security selection decisions moderately contributed to benchmark-relative results during the month.
Year to date, the fund's performance nearly matches the fund benchmark's performance.
October 2019 Investment Report
January 2018 Investment Report
Page 7 of 9 Page 7 of 9
Social Values Choice Equity Fund
Fund
Social Values Choice Equity Fund SVCEF Benchmarkiv Difference (percentage points)
October
+2.55% +2.66% -0.11
YTD
+22.32% +21.99%
+0.33
The Social Values Choice Equity Fund is a passively managed fund designed to closely match the fund benchmark, less fees and expenses. The fair market valuation policy (described here) positively affected performance during the month but detracted from relative returns year to date.
U.S. Treasury Inflation Protection Fund
Fund
U.S. Treasury Inflation Protection Fund Barclays U.S. Inflation Linked Bond Index Difference (percentage points)
October
+0.25% +0.25%
0.00
YTD
+7.96% +8.22% -0.26
The U.S. Treasury Inflation Protection Fund is a passively managed fund designed to closely match the performance of the fund benchmark, less fees and expenses.
October 2019 Investment Report
January 2018 Investment Report
For additional information, please contact:
Karen Manczko Director, Institutional Relationships Wespath Benefits and Investments (847) 866-4236 direct (847) 866-4100 general kmanczko@
Bill Stewart, CIMA, CFA Director, Institutional Relationships Wespath Benefits and Investments (847) 866-2700 direct (847) 866-4100 general bstewart@
1901 Chestnut Avenue Glenview, Illinois 60025 (847) 866-4100
Page 8 of 9 Page 8 of 9
i Historical returns are not indicative of future performance. Fund returns are net of fees. Please refer to the Investment Funds Description ? P Series, the Summary Fund Description ? P Series and the Statement of Additional Information for more information about the funds. This is not an offer to purchase securities.
ii The benchmark for the Inflation Protection Fund is comprised of 80% Barclays World Government Inflation Linked Bond Index (Hedged), 10% Barclays Emerging Market Tradeable Inflation Linked Bond Index (Unhedged) and 10% Bloomberg Commodity Index.
iii The benchmark for the Multiple Asset Fund is comprised of 35% Russell 3000 Index, 30% MSCI All Country World Index (ACWI) excluding USA Investable Market Index (IMI), 25% Barclays Capital U.S. Universal Index ex-Mortgage Backed Securities, and 10% Inflation Protection Fund (IPF) Benchmark.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related searches
- blank calendar october 2019 printable
- october 2019 toyota incentives
- printable calendar october 2019 pdf
- free october 2019 calendar printable word
- printable october 2019 calendar pdf
- october 2019 blank calendar pdf
- october 2019 calendar editable
- act october 2019 results
- calendar templates october 2019 printable
- editable calendar october 2019 pdf
- calendar for october 2019 blank
- october 2019 printable calendar word