October 2012 Investment Report


  • U.S. equities represented by the Russell 3000 Index declined 1.7% during the month. It was the first monthly decline following four consecutive months of gains. Uncertainty remained high as the November 6 U.S. elections approached. Year-to-date, U.S. equities have gained 14.1%.
  • Large-company U.S. equities outperformed small-company U.S. equities during October, as investors favored the lower risk-return profile of large-company equities. Stocks classified as “value” performed better than those with strong earnings growth.
  • Developed-country international equities as measured by the bellwether MSCI EAFE Index increased 0.8% in October. Investors favored the perceived lower risk of developed markets over emerging markets, which declined 0.7% as measured by the MSCI Emerging Markets IMI index.
  • Yields rose modestly, with roughly the same level increase for short-term and longer-term Treasury securities in October. The 2-year U.S. Treasury Note yield increased by 0.05% (5 basis points) to 0.283%. The 10-year U.S. Treasury Note yield increased by 0.06% (6 basis points) to 1.69%. The long bond (30-year U.S. Treasury) increased 0.03% (3 basis points) in yield to 2.86%.
  • Investment-grade debt as represented by the Barclays U.S. Credit Index increased 1.1%. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 0.9%, underperforming the investment-grade index by 0.2%. U.S. Treasury securities as measured by the Barclays U.S. Treasury Index decreased 0.2% in October, reflecting investors’ continued willingness to forego the perceived safety of U.S. Treasury securities.
  • The U.S. dollar was virtually unchanged compared to six other major currencies during October. Strength in the euro and Swiss franc were offset by weakness in the British pound, Swedish krona and Japanese yen.
  • Commodities as represented by the Dow Jones UBS Commodity Index decreased 3.9% in October. This drop was attributed to stagnation in China and the continuing European debt crisis. Industrial metals, followed by soft commodities (items that are consumed and perishable, such as coffee) were the strongest detractors to the index, dropping 9.3% and 5.7% respectively.

Economics Highlights

  • Hurricane Sandy battered the U.S. East Coast at the end of October. The storm caused the financial markets to close for two days—it was the longest weather-related closure since 1888. Damage caused by the storm is expected to be at least $25 billion. Many communities on the East Coast remained without power at month-end (with many still lacking power and other basic necessities as cleanup efforts continued into November).
  • China reported its slowest gross domestic product (GDP) growth (+7.4%) since early 2009. However, other elements of the Chinese economy show signs of GDP improvement, including exports and industrial production.
  • Third-quarter U.S. GDP grew at an initial rate of 2.0%, resulting in an average of 2.2% growth rate for the economy. This follows the decline in second-quarter GDP, as reported in the September Investment Report.
  • The volume of new cars sold was the most since March 2008, as demand for Toyotas and Hondas soared. Sales increased by 12.8% compared with last year.
  • Retail sales in October were better than expected. The market estimated an increase of 0.7%; the actual result was an increase of 1.1%. The previous month’s actual sales were revised upward by an additional 0.3%. Analysts attributed the improved consumer spending results to the launch of the new iPhone 5.

Geopolitical Headlines

  • U.S. national attention remained focused on the three presidential debates in October and the upcoming election. Regardless of the election outcome, the president and Congress will need to deal with the impending “fiscal cliff,” which forces drastic automatic federal spending cuts and an across-the-board increase in income tax rates if Congress does not take proactive action.
  • Hugo Chavez defeated Henrique Capriles in the Venezuelan presidential election to win his sixth term as president. Many were optimistic that the strong showing of the opposition and Chavez’s battle with cancer might lead to a change to the anti-U.S. sentiment administration of Venezuela.
  • S&P cut its rating on Spanish debt by two levels to BBB-. The S&P rating is now at the same level as Moody’s rating, which later affirmed its rating during the month. Fitch downgraded Spain to BBB in June.

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

M/M = Month-over-month (% change since last month)
Q/Q = Quarter-over-quarter (% change since last quarter)
Y/Y = Year-over-year (% change since the same month, last year)
SA = Seasonally adjusted
SAAR = Seasonally adjusted annual rate

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 October Year-to-Date
Inflation Protection Fund +0.4% +6.7%
Barclays Capital U.S. Government Inflation-Linked Bond Index +1.0% +7.5%
Difference -0.6% -0.8%
  • The Inflation Protection Fund advanced 0.4% in October, but underperformed the fund benchmark. Two of the fund’s diversifying strategies—commodities and inflation-linked bonds of developed countries—negatively contributed to the fund’s benchmark-relative performance. The fund’s 10% allocation to commodities futures contracts declined 3.9%, primarily due to a drop in the price of oil late in October. The price of oil declined at month-end amid expectations of reduced demand due to refinery closures resulting from Atlantic storm Sandy, as well as increased domestic onshore U.S. oil production throughout the month. However, inflation-linked bonds from developing countries gained 1.8% and partially offset the negative contribution of the other two diversifying strategies.
  • For the year to date, the Inflation Protection Fund has gained 6.7% but underperformed its benchmark by 0.8%. One of the fund’s diversifying strategies—its 10% allocation to bonds of developing countries—has gained 15.8% and positively contributed to benchmark-relative performance. However, the fund’s other two diversifying strategies—commodities and inflation-linked bonds from developed countries—have negatively contributed to benchmark-relative performance, as their respective 4.4% and 4.7% returns for the year to date have failed to keep pace with the fund benchmark.

Fixed Income Fund

Fund October Year-to-Date
Fixed Income Fund +0.5% +8.4%
Barclays Capital U.S. Universal (ex MBS) Index +0.5% +6.2%
Difference +0.0% +2.2%
  • The Fixed Income Fund gained 0.5% in October, matching the returns of the performance benchmark. The fund benefitted slightly from its higher-than-benchmark allocation to corporate credit, whereas the fund’s allocation to positive social purpose loans slightly detracted from its benchmark-relative performance.
  • For the year to date, the Fixed Income Fund has gained 8.4% and meaningfully outperformed its benchmark by 2.2%. All but two of the fund’s strategies have added value relative to the fund benchmark. PIMCO, the fund’s largest manager, exceeds its performance benchmark for the year to date by 3.8% and represents the most significant contributor to the fund’s excess performance. In addition, three of the fund's diversifying strategies have gained more than 10% so far in 2012. The fund's allocation to debt from developing countries, its high-yield bond allocation and its allocation to opportunistic credit gained 14.5%, 11.2% and 10.9% respectively. The Fixed Income Fund’s allocation to positive social purpose loans has gained 5.2% and slightly detracted from the fund’s benchmark-relative performance.

U.S. Equity Fund

Fund October Year-to-Date
U.S. Equity Fund -1.5% +12.3%
Russell 3000 -1.7% +14.1%
Difference +0.2% -1.8%
  • The U.S. Equity Fund declined 1.5% in October and slightly outperformed its Russell 3000 Index benchmark. The fund generally benefitted from the excess benchmark-relative performance by four of the five active managers of small and mid-sized companies and the fund’s 10% allocation to alternative investments. Poor benchmark-relative performance by two of the U.S. Equity Fund’s large-company growth managers slightly detracted from the fund’s benchmark-relative performance.
  • For the year to date, the fund has gained 12.3% but trails its benchmark return by 1.8%. The U.S. Equity Fund’s allocation to alternative investments and its higher-than-benchmark allocation to small and mid-sized companies have both detracted from the fund’s benchmark-relative performance. The S&P 400 Index of mid-sized companies and the Russell 2000 Index of small companies have gained 12.9% and 11.8% respectively year to date.

International Equity Fund

Fund October Year-to-Date
International Equity Fund +0.8% +13.6%
MSCI ACWI ex US +0.3% +11.1%
Difference +0.5% +2.5%
  • The International Equity Fund advanced 0.8% in October and outperformed its benchmark return by 0.5%. The fund benefitted from its 7% allocation to international real estate investment trusts (REITs), which gained 3.3% for the month. It also benefitted from excellent benchmark-relative performance by its two emerging markets managers.
  • For the year to date, the International Equity Fund has gained 13.6% and meaningfully outperformed its benchmark by 2.5%. The primary contributors to the positive relative performance include the fund’s 7% allocation to international REITs and 15% allocation to international small companies, which have gained 33.8% and 18.1% respectively for the year to date.

Multiple Asset Fund

Fund October Year-to-Date
Multiple Asset Fund -0.3% +11.0%
Composite Benchmark -0.5% +11.1%
Difference +0.2% -0.1%
  • For October, the Multiple Asset Fund declined 0.3% and slightly outperformed its fund benchmark. The U.S. and International equity funds positively contributed to benchmark-relative performance, although their contribution was partially offset by below-benchmark performance of the Inflation Protection Fund.
  • For the year, the Multiple Asset Fund has gained 11.0% and slightly underperformed the 11.1% return of its composite benchmark. The Fixed Income Fund and International Equity Fund have positively contributed to benchmark-relative performance during 2012, whereas the Inflation Protection Fund and U.S. Equity Fund have detracted from benchmark-relative performance.

Balanced Social Values Plus Fund

Fund October Year-to-Date
Balanced Social Values Plus Fund -1.2% +7.9%
Composite Benchmark -1.2% +7.5%
Difference +0.0% +0.4%


close (X)