February 2012 Investment Report


  • U.S. equities represented by the Russell 3000 Index increased 4.2% during February. Investor sentiment continued to improve as economic news remained positive, including improving U.S. Gross Domestic Product, rising sales of existing homes and gains in retail sales. The Dow Jones Industrial Average closed above 13,000 during the month, its highest level since May 2008. Large-company U.S. equities outperformed small-company U.S. equities, and stocks with strong earnings growth performed better than those classified as “value.”
  • International developed equities, as measured by the bellwether MSCI EAFE Index, increased 5.7% in U.S. dollar terms. A new bailout package enabled Greece to meet its sovereign debt obligations and increased optimism among global investors, although investors remain concerned over Greek’s longer-term financial situation. Equities of developing countries also increased as the MSCI Emerging Markets IMI Index gained 6.3% during the month. February was the second consecutive month of gains in international equities, which have now recouped the majority of their losses from 2011.
  • The interest rate yield curve steepened in February. Short rates (less than three years) rose 3 to 9 basis points. The yield on the 10-year U.S. Treasury Note increased by 0.17% (17 basis points) to end the month at 1.97%. The long bond (30-year U.S. Treasury) rose 15 basis points in yield to 3.09%.
  • The U.S. credit sector continued to perform well in February. Investment-grade debt as represented by the Barclays U.S. Credit Index increased by 0.8%. There was strong demand for below investment-grade debt as shown in the Barclays U.S. High Yield Index, which added an additional 160 basis points of performance over investment-grade debt, returning 2.4% in February.
  • The U.S. dollar continued to decline in February. The Dollar Index, which compares the U.S. dollar to six other major currencies, was down 0.7%. Within that index, the euro strengthened to $1.33, a gain of 1.8%. Emerging market currencies showed strength as well, with the Brazilian real and Mexican peso both rising by more than 1.4% against the U.S. dollar.
  • Commodities advanced in February. The Dow Jones UBS Commodity Index showed a gain of 2.7% for the month largely driven by a strong performance in the energy sector, with oil gaining 8.3% for the month. The precious metals sector was the only detractor in the index, primarily caused by a decline in the price of gold. After Federal Reserve Bank Chairman Ben Bernanke’s February 29 speech, gold declined over 5% in one day.

Economics Highlights

  • Retail sales were relatively strong during the holidays and up through January, usually a relatively slow period. Thomson Reuters, which tracks 20 retailers, showed a jump in the retail sales index of 4.2%. Expectations were for an increase of 2.0%. Saks Inc. was one of the strongest performers with sales expanding 10.5%.
  • Real Gross Domestic Product was revised from 2.8% to 3.0% for the fourth quarter of 2011. This is the fastest growth since the second quarter of 2010. The main drivers were consumer spending and growing company inventories.
  • New claims for unemployment continued to decline and reached early recession levels as the four-week moving average dropped to 366,250. Total claims for the last reported week in February were 358,000, a drop of 15,000. Even though this indicator says nothing about increases in new jobs, it is generally a good indicator of job market strength. The peak of 652,500 claims occurred in early 2009; the current level matches April 2008.
  • For the first time since 2009 the euro-zone economy reported a contraction. Belgium, Greece, Italy, the Netherlands and Portugal all reported economic contraction signaling a recession. Moody’s cut the credit ratings of Italy, Portugal and Spain and placed additional countries on negative outlook. Greece became the first euro-zone member rated in default by S&P.

Geopolitical Headlines

  • The euro-zone finance ministers agreed upon a second bailout package for Greece totaling $170 billion that they will parcel out to Greece as it meets specified economic hurdles. Greek citizens protested the additional austerity measures with more violence.
  • Republicans and Democrats reached a compromise and extended payroll tax cuts to the end of the year. Republicans dropped their request for additional spending cuts, ending a standoff that began in December.
  • Mitt Romney won the Michigan and Arizona Republican primaries as the Republican contenders continued to campaign and position themselves for the upcoming “Super Tuesday” primaries.
  • North Korea says it will give up nuclear tests, long-range missile launches and uranium enrichment in exchange for food aid from the United States. In addition, they will allow nuclear inspectors to return to the country for the first time since being expelled in 2009.

Sources: Bloomberg News, the Economist, the Wall Street Journal, CNBC and CNN

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 (Net of Fees Performance)

For returns of one year, three years, five years, 10 years and Since Inception periods, please visit our Historical Funds Performance page.

Inflation Protection Fund

Fund February Year-to-Date
Inflation Protection Fund +0.7% +3.0%
Barclays Capital U.S. Inflation-Linked Bond Index -0.4% +2.0%
Difference +1.1% +1.0%
  • The Inflation Protection Fund gained 0.7% and significantly exceeded the return of the fund benchmark. All three diversifying strategies contributed to relative performance as the fund’s 10% allocations to commodities and inflation-linked bonds of developing countries both gained more than 3% for the month.
  • For the year, the fund has gained 3.0% and is outperforming its benchmark due to meaningful performance from two of the fund’s diversifying strategies.

Fixed Income Fund

Fund February Year-to-Date
Fixed Income Fund +1.0% +3.0%
Barclays Capital U.S. Universal (Ex MBS) Index +0.3% +1.6%
Difference +0.7% +1.4%
  • The Fixed Income Fund advanced 1.0% in February and for the second straight month delivered excellent benchmark-relative performance after producing disappointing benchmark-relative results in 2011. The fund’s excess performance is primarily attributed to improvement in the market’s risk appetite for lower credit quality bonds and weakness in the U.S. dollar, which benefitted the fund’s exposure to bonds denominated in foreign currencies.
  • For the year, the fund has gained 3.0%, nearly doubling the return of the fund benchmark—recouping 80% of its benchmark-relative underperformance in 2011. The fund’s allocation to bonds from developing countries has gained nearly 7%, its credit sensitive strategies have gained over 4.5%, and its global bond allocation has gained 3.6% because of U.S. dollar weakness. In addition, the fund’s largest manager, PIMCO, has rebounded nicely from a disappointing 2011.

U.S. Equity Fund

Fund February Year-to-Date
U.S. Equity Fund +3.7% +9.2%
Russell 3000 +4.2% +9.5%
Difference -0.5% -0.3%
  • The U.S. Equity Fund gained 3.7% in February, but underperformed the fund’s benchmark by 0.5%. Primary contributors to the fund’s below benchmark performance were its allocation to publicly traded real estate investment trusts (REITs), which declined 1.2% for the month and the fund’s allocation to alternative investments (private equity and private real estate), which were essentially flat. Increases in the valuation for private investments will lag in advancing markets.
  • For the year, the U.S. Equity Fund has gained 9.2%, though it has slightly underperformed the fund benchmark by 0.3%. Though most of the fund’s managers exceeded their individual performance benchmarks, lower returns from the fund’s REIT allocation and alternative investments allocation have more than offset these gains.

International Equity Fund

Fund February Year-to-Date
International Equity Fund +6.4% +14.1%
MSCI ACWI x US +5.7% +13.1%
Difference +0.7% +1.0%
  • The International Equity Fund gained 6.4% in February and outperformed its benchmark by 0.7%. The fund’s diversifying strategies of international REITs and small international companies were the primary drivers of the fund’s positive benchmark-relative results.
  • For the first two months of the year, the fund has produced a healthy 14.1% return—exceeding its performance benchmark by 1.0%. Contrary to what happened in 2011, the fund’s diversifying strategies of stocks from developing countries, small-company stocks and international REITs have all advanced at least 16% and have positively contributed to performance.

Multiple Asset Fund

Fund February Year-to-Date
Multiple Asset Fund +3.3% +8.0%
Composite Benchmark +3.1% +7.5%
Difference +0.2% +0.5%
  • For February, the Multiple Asset Fund gained 3.3% and outperformed its benchmark return by 0.2%. The two bond funds and the International Equity Fund positively contributed to benchmark-relative performance, whereas the U.S. Equity Fund negatively contributed to performance.
  • For the year, the fund has gained 8.0% and has outperformed the 7.5% return of its benchmark. All funds except the U.S. Equity Fund have positively contributed to benchmark-relative performance for the first two months of the year.

Balanced Social Values Plus Fund

Fund February Year-to-Date
Balanced Social Values Plus Fund +2.3% +5.2%
Composite Benchmark +2.3% +5.1%
Difference +0.0% +0.1%


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