April 2011 Investment Report


  • U.S. equities represented by the Russell 3000 Index advanced 3.0% for the month. After the best first quarter since 1998, the S&P 500 gained 3.0% in April, driving the year-to-date return to 9.1%. The market continued to rally despite growing concerns about inflation, the pending expiration of the Federal Reserve’s (the Fed’s) monetary stimulus program, and the impact of Middle East/North Africa (MENA) unrest on oil prices.
  • Large-company U.S. equities outperformed small-company U.S. equities. For both groups, companies with strong earnings growth performed better than equities classified as “value.”
  • International equities also advanced during April. The bellwether MSCI EAFE Index, which measures performance of developed-country equities in U.S. dollar terms, increased 6.0%. Developed market currencies strengthened 3.9% versus the U.S. dollar, as measured by the U.S. Dollar Index. Equities of developing countries, as measured by the MSCI Emerging Markets IMI Index, increased 3.3% in March.
  • During the month, the yield on the benchmark U.S. 10-year Treasury note declined 15 basis points from 3.47% to 3.32% as the Fed signaled continued support for low interest rates. U.S. Treasury Inflation Protection Securities (TIPS), as measured by the Barclays U.S. Government Inflation-Linked Bond Index, advanced 2.6%, while the 10-year breakeven inflation measure, which represents investors’ collective judgment of future inflation, increased from 2.48% to 2.57%. Global bonds, as measured by the Barclays Global Aggregate Index, advanced 3.1%, largely due to weakness in the U.S. dollar.
  • Commodity prices continued to advance due to the decline of the U.S. dollar, low short-term U.S. interest rates (which have made riskier assets more attractive), and increased demand due to global growth. Brent crude oil (+7.3%), gold (+9.2%), silver (+21.2%) and corn (+8.8%) all advanced, while copper declined (-3.1%).

Economics Highlights

  • The European Central Bank raised interest rates by one-quarter of a percentage point in its first rate hike since July 2008 to counter inflation pressures in the 17-country euro zone. Meanwhile, the U.S. Fed Chairman Ben Bernanke reaffirmed intentions to keep interest rates at historically low levels while simultaneously allowing the Fed’s second quantitative easing initiative to finish in June.
  • Standard and Poor’s (“S&P”) revised its outlook for the U.S. from stable to negative. This means the rating agency has a one-in-three likelihood of lowering the long-term AAA credit rating of the U.S. S&P believes there is a material risk that U.S. policymakers will not reach agreement on addressing medium- and long-term budgetary challenges by 2013. The financial community continues to discuss the significance of S&P’s comments and the potential ramifications if the U.S. loses its AAA credit rating.
  • U.S. Treasury Secretary Timothy Geithner secured additional time for Congress to negotiate a deal to increase the borrowing limit of the U.S. government, which currently stands at $14.3 trillion. The U.S. risks defaulting on its debts if the limit is not increased.
  • European producer-price inflation unexpectedly accelerated to 6.7%, the fastest in 2.5 years, adding to concerns that surging energy costs will impact consumers and prompt the European Central Bank to raise interest rates further.

Geopolitical Headlines

  • U.S. troops killed Al-Qaeda leader Osama bin Laden, ending a nearly decade-long manhunt for the mastermind behind the September 11, 2001 terror attacks that killed thousands of Americans.
  • Turkish Prime Minister Erdogan, a key regional leader, urged Moammar Gadhafi to step down as ruler of Libya. Libya, an oil-rich nation in North Africa, continues to be embroiled in political unrest.
  • Portugal reached an agreement regarding its European Union-led bailout that will provide as much as $116 billion in aid and allow more time to reduce the country’s budget deficit.

Key Monthly Economic Statistics

This table contains a list of key monthly economic statistics. Each statistic is listed with a link to a Web page that provides a thorough description of the economic indicator.

  Positive Statistics
  Neutral Statistics
  Negative Statistics

Source: briefing.com–economic statistics; Econoday–description of the economic indicators

Investment Fund Review

Inflation Protection Fund

Fund April Year-to-Date
Inflation Protection Fund +2.3% +4.6%
Barclays Capital U.S. Government Inflation-Linked Bond Index +2.6% +4.7%
Difference -0.3% -0.1%
  • The Inflation Protection Fund gained 2.3% during April but underperformed its benchmark by 0.3%, largely due to the performance of the fund’s 30% allocation to global inflation-linked bonds. Although the fund’s holdings of global bonds advanced 1.6%, the gains in U.S. TIPS outpaced the gains in non-U.S. government bonds despite U.S. dollar weakness—perhaps due to expectations for a higher level of U.S. inflation in years to come. Foreign central banks have been more aggressive in raising interest rates to control inflation. However, because of rising commodity prices, the fund’s 10% allocation to commodities partially offset the negative contribution to performance from the fund’s non-U.S. bonds. The fund’s 10% allocation to bonds from developing countries also positively influenced the fund’s performance.
  • For the year-to-date, the fund’s slight excess performance is attributable primarily to the fund’s holdings of commodities, which have gained 11.4% so far in 2011. However, the fund’s exposure to inflation-linked bonds of developed countries has detracted from returns.

Fixed Income Fund

Fund April Year-to-Date
Fixed Income Fund +2.0% +3.4%
Barclays Capital U.S. Universal (ex MBS) Index +1.4% +2.1%
Difference +0.6% +1.3%
  • The Fixed Income Fund again outperformed its benchmark in April, largely because of the fund’s exposure to bonds denominated in currencies other than the U.S. dollar. The dollar weakened in April relative to most developed and developing country currencies.
  • For the year-to-date, the fund has meaningfully outperformed its benchmark, largely due to an increase in the price of non-dollar denominated bonds resulting from weakness of the U.S. dollar. In addition, the fund’s higher risk credit portfolios added value as a result of improving economic conditions.

U.S. Equity Fund

Fund April Year-to-Date
U.S. Equity Fund +2.6% +9.0%
Russell 3000 +3.0% +9.6%
Difference -0.4% -0.6%
  • The U.S. Equity Fund advanced 2.6% in April but underperformed its benchmark by 0.4%. The primary factor contributing to the fund’s benchmark-relative underperformance is the fund’s 10% allocation to alternative investments (real estate and private equity). The increase in value of these assets typically lags the increase in value of public equities.
  • For the year-to-date, U.S. stocks continue as the best-performing asset class. As for the month, exposure to private real estate and private equity detracted from performance. The fund has recognized gains of 3.5% for its private equity holdings and 1.3% for its private real estate holdings. However, the fund’s holdings of public real estate investment trusts have gained 13.7%, and the fund’s larger-than-benchmark allocation to small and mid-sized companies positively contributed to benchmark-relative performance and partially offset the negative contribution from the alternative investment holdings.

International Equity Fund

Fund April Year-to-Date
International Equity Fund +4.7% +6.6%
MSCI ACWI x US +4.9% +8.2%
Difference -0.2% -1.6%
  • Dollar weakness positively contributed to 4.7% April gains in the international stock markets. The International Equity Fund slightly underperformed its benchmark because the fund has a smaller allocation to the stocks of companies domiciled in Europe. The MSCI Europe IMI Index gained 7.4% for the month.
  • For the year-to-date, the International Equity Fund meaningfully trails its benchmark by 1.6%. As for the month, the fund’s underperformance is partially attributable to its less-than-benchmark exposure to stocks from the European Union. Through April, the MSCI Europe IMI Index has gained 9.7% compared to the 8.3% performance for the fund benchmark. In addition, the fund’s exposure to stocks of developing countries has gained about 4.5%.

Multiple Asset Fund

Fund April Year-to-Date
Multiple Asset Fund +2.8% +6.7%
Composite Benchmark +2.9% +6.9%
Difference -0.1% -0.2%
  • For the month of April, the Multiple Asset Fund (MAF) underperformed, as three of its underlying funds underperformed their respective benchmarks.
  • For the year-to-date, the fund is slightly underperforming its benchmark. The Fixed Income Fund has positively contributed to MAF’s benchmark-relative returns; though its positive contribution is more than offset by the negative contribution from MAF’s other three funds.

Balanced Social Values Plus Fund

Fund April Year-to-Date
Balanced Social Values Plus Fund +2.3% +4.8%
Composite Benchmark +2.4% +4.9%
Difference -0.1% -0.1%


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