January 2013 Investment Report

Markets

  • U.S. equities represented by the Russell 3000 Index increased 5.5% in January. Oil and gas company Exxon Mobil surpassed Apple as the largest public company in the world by market capitalization after the technology company announced disappointing earnings during the month and its stock price declined 14.4%. The S&P 500 gained 5.2%, its best January performance since 1997.
  • Large company “value” stocks gained 6.5% and outperformed the 4.3% return of large companies with strong earnings growth. Small company stocks as measured by the Russell 2000 Index gained 6.3% during the month.
  • Developed country international equities as measured by the MSCI EAFE Index increased 5.3% in January. Investors had less confidence in developing markets, which gained 1.5% as measured by the MSCI Emerging Markets IMI Index.
  • The U.S. Treasury yield curve steepened in January amid signs of modest economic improvement. The 2-year U.S. Treasury Note yield increased by 0.02% (2 basis points) to 0.26%, and the 10-year U.S. Treasury Note yield increased by 0.23% (23 basis points) to 1.99%. The long bond (30-year U.S. Treasury) increased 0.22% (22 basis points) in yield to 3.17%.
  • Investment-grade debt as represented by the Barclays U.S. Credit Index declined 0.9% for the month, largely due to steepening of the yield curve. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 1.3%, outperforming the investment-grade index by 2.2%, reflecting investor appetite for riskier assets. U.S. Treasury securities as measured by the Barclays U.S. Treasury Index decreased 0.8% in January.
  • The U.S. dollar as measured by the U.S. Dollar Index decreased 0.7% during January. The euro increased 2.9% relative to the dollar as European debt crisis fears ebbed and U.S. monetary policy remained highly accommodative. The Brazilian real and Mexican peso increased 3.0% and 1.1% relative to the dollar, respectively. The yen declined 5.4% relative to the dollar as the Bank of Japan doubled its inflation target to 2% and signaled a willingness to implement more aggressive monetary stimulus to achieve the target.
  • Commodities as represented by the Dow Jones UBS Commodity Index increased 2.4% in January. Petroleum and grains were the strongest performers, rising 5.7% and 3.7% respectively.

Economics Highlights

  • Congress passed a bill authorizing a temporary suspension of the U.S. debt ceiling until May 19. This allows the U.S. government to avoid a shutdown and debt default while the House and Senate continue to work toward a budget resolution.
  • Manufacturing in the U.S. grew more than expected in January. The Institute for Supply Management’s manufacturing index climbed to 53.1 in January after a reading of 50.2 in December. Readings above 50 indicate expansion of manufacturing activity.
  • Real gross domestic product (GDP) unexpectedly declined by 0.1% in the fourth quarter, resulting in a sluggish growth rate of 2.2% for 2012. The fourth quarter decline was attributed to reduced government spending and lower business spending on inventories. However, positive signs in the report included strength in consumer spending and business investment.
  • China’s economy grew at an annualized rate of 7.9% in the fourth quarter compared to the same period a year ago, slightly beating expectations. Chinese growth was 7.8% for all of 2012, which was its slowest annual growth rate since 1999.
  • The S&P/Case-Shiller 20-city Home Price Index increased 5.5% for the twelve months through the most recent measurement period ended November. The year-over-year gain was the largest since August 2006.

Geopolitical Headlines

  • President Obama nominated Jacob Lew to succeed Timothy Geithner as U.S. Treasury Secretary. Lew is currently the White House Chief of Staff and was formerly director of the Office of Management and Budget under President Clinton.
  • Benjamin Netanyahu won the general election in Israel for another term as Prime Minister, although his conservative party lost some Parliamentary seats to centrist challengers. Netanyahu must now build a governing coalition from the various factions.
  • Terrorists seized a remote desert gas facility in Algeria, taking hostages that included many international workers. Al Qaeda claimed responsibility for the siege as retaliation for France’s efforts to force Islamist rebels out of neighboring Mali. The Algerian military ended the siege by storming the facility, resulting in dozens of casualties.
  • French labor unions and business leaders reached an agreement on a proposal to modify national labor regulations. The proposed changes would give employers additional flexibility to reduce worker hours during periods of reduced demand. French President Francois Hollande had called for the talks in an effort to increase his country’s economic competitiveness.

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 January
Inflation Protection Fund +0.30%
Barclays Capital U.S. Government Inflation-Linked Bond Index -0.76%
Difference +1.06%


The Inflation Protection Fund advanced 0.30% in January and meaningfully outperformed the fund benchmark. All four of the fund’s diversifying strategies added value compared to the benchmark. The fund’s 10% allocation to commodities gained 3.3% due to increased optimism regarding U.S. and world growth during 2013. The fund’s allocation to inflation-linked bonds from developing countries gained 1.2%, largely resulting from weakness in the U.S. dollar compared to foreign currencies.

Fixed Income Fund

Fund January
Fixed Income Fund -0.18%
Barclays Capital U.S. Universal (ex MBS) Index -0.53%
Difference +0.35%


The Fixed Income Fund declined 0.18% in January and outperformed the fund’s benchmark return. With increasing optimism regarding the world economy, higher risk bonds gained during the month as investors continued to reduce their exposures to low-risk U.S. Treasury securities. Both of the fund’s strategies that focus on below investment grade debt advanced at least 1%. None of the fund’s strategies materially detracted from performance.

U.S. Equity Fund

Fund January
U.S. Equity Fund +5.67%
Russell 3000 +5.49%
Difference +0.18%


The U.S. Equity Fund gained 5.67% in January and modestly outperformed the fund’s benchmark. The fund benefitted from its larger-than-benchmark allocation to stocks of small and mid-sized companies as the Russell 2000 Index of small companies gained 6.3% compared to the large company S&P 500 return of 5.2%. The performance difference between the two benchmarks is almost entirely attributable to the decline of Apple Computer shares in January. In addition, eight of the fund’s 12 active managers outperformed their respective benchmarks. The fund’s allocation to U.S. real estate investment trusts (REITs) detracted from benchmark relative performance gaining 3.0% for the month. In addition, the fund’s 10% allocation to the alternative investment strategies of private real estate and private equity gained about 1% during the month and detracted from benchmark-relative performance.

International Equity Fund

Fund January
International Equity Fund +3.98%
MSCI ACWI ex US +4.10%
Difference -0.12%


The International Equity Fund advanced 3.98% in January and was the only Wespath (General Board) fund that underperformed its benchmark for the month. The fund’s allocation to international REITs detracted from performance, gaining 1.7% compared to the 4.1% benchmark return.

Multiple Asset Fund

Fund January
Multiple Asset Fund +3.27%
Composite Benchmark +3.08%
Difference +0.19%


For the month of January, the Multiple Asset Fund gained 3.27% and outperformed its benchmark return by 0.19%. Three of the fund’s excess returns compared to their respective benchmarks contributed to the fund’s positive benchmark-relative performance, whereas the International Equity Fund slightly detracted.

Balanced Social Values Plus Fund

Fund January
Balanced Social Values Plus Fund +3.75%
Composite Benchmark +3.67%
Difference  +0.08%

 

 
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