July 2012 Investment Report


  • U.S. equities represented by the Russell 3000 Index increased 1.0% during July. International developed equities as measured by the bellwether MSCI EAFE Index increased 1.1% in U.S. dollar terms, and the MSCI Emerging Markets IMI Index gained 1.7%. U.S. stocks and international stocks had declined 2–3% up to the last week of July but then advanced sharply when European Central Bank (ECB) President Mario Draghi said the ECB would “do whatever it takes” to defend the euro from further declines. For the year, the Russell 3000 has gained 10.4%, and the EAFE Index has advanced 4.3%.
  • The interest rate yield curve flattened in July. The two-year U.S. Treasury Note yield decreased by 0.09% (9 basis points) to 0.21%. The 10-year U.S. Treasury Note yield decreased by 0.18% (18 basis points) to 1.47%. The long bond (30-year U.S. Treasury) decreased 21 basis points in yield to 2.55%.
  • Investment-grade debt as represented by the Barclays U.S. Credit Index increased 2.7%. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 1.9%, underperforming the investment-grade index by 0.8%. U.S. Treasury securities as measured by the Barclays U.S. Treasury Index increased 1.0% in July.
  • The U.S. dollar strengthened during July, largely reflecting its perceived safety relative to the euro. The Dollar Index, which compares the U.S. dollar to six other major currencies, increased 1.2%. Within the index, the euro decreased 2.9% versus the dollar, while the Japanese yen increased 2.2% for the month.
  • Commodities, as represented by the Dow Jones UBS Commodity Index, increased 6.5% in July. Grains were the strongest contributor to the index for the second consecutive month, rising 19.8% as hot and dry weather conditions across much of the U.S. adversely affected crop growth.

Economics Highlights

  • The monetary authorities in China, the euro zone and the United Kingdom applied additional monetary stimulus for their respective economies. China lowered its benchmark one-year deposit rate by 0.25% in an effort to combat slowing growth; the euro zone lowered overnight bank deposit rates to forestall the region’s ongoing debt crisis; and the Bank of England resumed buying bonds in a third wave of quantitative easing designed to reduce the impact of the euro-zone debt crisis.
  • Moody’s lowered its outlook on Germany’s AAA credit rating to negative, citing the massive costs of both maintaining or abandoning the common currency.
  • General Motors stock declined to its lowest level subsequent to its initial public offering (IPO) in November 2010. Prior to its IPO, the company benefitted from a controversial taxpayer-funded bailout in June 2009.
  • Shares of newly public social networking giant Facebook continued their decline as concerns increased regarding sources for the company’s revenue growth. Facebook shares were down more than 45% since the company issued shares at $38 in May.

Geopolitical Headlines

  • The U.S. presidential campaigns continued to fundraise in preparation for the November election. During July, President Obama’s campaign was reported to have raised $75 million for his re-election effort compared with $101 million for the campaign of presumptive Republican nominee Mitt Romney.
  • Battles between the Syrian government and rebels intensified as the 17-month uprising continued. The United Nations Security Council proposed sanctions against the Syrian government, but China and Russia vetoed the resolution. This is the third time China and Russia blocked efforts by the U.S. and its allies to influence the Syrian government to end the civil conflict.
  • Widespread power outages in India left 620 million people—more than half the country’s population—without power over a two-day period. The Confederation of Indian Industry said the outage cost businesses hundreds of millions of dollars, although the blackouts did not affect the financial center of Mumbai.
  • The 2012 London Summer Olympics began, with the opening ceremony occurring on July 27. More than 10,000 athletes from around the world were expected to participate in the games through the August 12 conclusion.

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

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 July Year-to-Date
Inflation Protection Fund +2.3% +5.3%
Barclays Capital U.S. Government Inflation-Linked Bond Index +2.0% +6.3%
Difference +0.3% -1.0%
  • The Inflation Protection Fund advanced 2.3% during July and outperformed the fund’s benchmark return by 0.3%. The excess performance is primarily attributable to the fund’s 10% allocation to commodities, which gained 5.4% for the month.
  • For the year to date, the fund has returned 5.3% and has underperformed its benchmark return by 1.0%. Two of the fund’s diversifying strategies—inflation-linked bonds from developed countries and commodities—have detracted from performance, returning 4.6% and 2.4% respectively. However, the fund’s third diversifying strategy—bonds from developing countries—has contributed positively to benchmark-relative performance and gained 9.2% in 2012 through July.

Fixed Income Fund

Fund July Year-to-Date
Fixed Income Fund +1.8% +6.5%
Barclays Capital U.S. Universal (ex MBS) Index +1.7% +5.1%
Difference +0.1% +1.4%
  • The Fixed Income Fund gained 1.8% in July and slightly exceeded the performance of the fund’s benchmark. The fund’s allocation to investment-grade corporate debt and emerging market debt gained 2.7% and 3.4% respectively, and positively contributed to the fund’s benchmark-relative performance. However, the fund’s allocation to international bonds gained only 0.9% and detracted from relative performance.
  • For the year to date, the fund has gained 6.5%. It comfortably exceeds the performance of the fund benchmark. The fund’s allocation to emerging market debt has gained 10.3% for the year, and all of the fund’s credit strategies have produced returns higher than the fund’s benchmark. In addition, the fund’s largest active manager, PIMCO, exceeded its 2012 performance benchmark by 2.8% through July. The only strategy that has detracted from benchmark-relative performance is the fund’s allocation to global bonds, which gained 4.3% through July.

U.S. Equity Fund

Fund July Year-to-Date
U.S. Equity Fund +0.4% +8.6%
Russell 3000 +1.0% +10.4%
Difference -0.6% -1.8%
  • The U.S. Equity Fund gained 0.4% in July but underperformed its benchmark return by 0.6%. The fund’s greater-than-benchmark allocations to stocks of small and mid-sized companies detracted from performance, as the Russell 2000 Index of small stocks declined 1.4% compared with the 1.4% gain by the S&P 500 Index of large company stocks.
  • For the year to date, the U.S. Equity Fund has gained 8.6% and trails the Russell 3000 Index by 1.8%. The large company S&P 500 Index has gained 11.0% compared with the 7.0% gain for the Russell 2000 Index of small companies. In addition to the fund’s overweight of small and mid-sized companies, the fund’s managers collectively find that stocks of lower dividend-paying companies are more attractive compared with higher dividend-paying companies. Nonetheless, investors have continued a trend of preferring high dividend-paying companies. In July, J.P. Morgan reported that the relative valuation based on the price-earnings ratio for the highest quintile of dividend-paying stocks reached its highest level in more than 50 years. Accordingly, the U.S. Equity Fund should benefit when this trend reverses.

International Equity Fund

Fund July Year-to-Date
International Equity Fund +1.7% +6.4%
MSCI ACWI ex US +1.3% +4.3%
Difference +0.4% +2.1%
  • The International Equity Fund gained 1.7% for the month and outperformed the fund benchmark by 0.4%. The primary contributors to the fund’s excess performance were allocations to international real estate investment trusts (REITs) and international small company stocks, which gained approximately 5% and 2% respectively.
  • For the year to date, the International Equity Fund has gained 6.4% and has meaningfully outperformed its benchmark return of 4.3%. The fund’s two international REIT portfolios have gained 24.7% and 20.4%, far surpassing the performance of the fund benchmark. In addition, the fund’s allocation to international small company stocks has positively contributed to benchmark relative performance and gained 8.6% to date in 2012. However, poor benchmark-relative performance of one of the fund’s emerging markets managers has partially offset these gains.

Multiple Asset Fund

Fund July Year-to-Date
Multiple Asset Fund +1.2% +7.2%
Composite Benchmark +1.3% +7.6%
Difference -0.1% -0.4%
  • The Multiple Asset Fund (MAF) gained 1.2% and slightly underperformed its benchmark by 0.1%. The benchmark-relative gains of three of the four funds that comprise MAF were more than offset by the U.S. Equity Fund’s below-benchmark performance.
  • For the year to date, MAF has gained 7.2% but trails its benchmark return by 0.4%. The Fixed Income Fund and International Equity Fund have contributed positively to benchmark-relative performance, while the Inflation Protection Fund and U.S. Equity Fund have detracted from benchmark-relative performance.

Balanced Social Values Plus Fund

Fund July Year-to-Date
Balanced Social Values Plus Fund +0.7% +5.9%
Composite Benchmark +0.7% +5.5%
Difference +0.0% +0.4%


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