January 2010 Investment Report

Beginning this month, we are introducing a new format for the Monthly Investment Report. We believe that this new format will allow us to better summarize the relevant events affecting investment performance for the previous month.


  • The Russell 3000, a broad U.S. equity market index, declined 3.6% for the month. The decline reflected investor uncertainty about the strength of the economic recovery.
  • Large-company stocks declined 3.6% in January, very modestly outperforming small-company stocks, which declined 3.7%. Value stocks outperformed growth stocks.
  • Stocks of companies in developed countries decreased 4.4% for the month, while stocks of companies in developing countries decreased 5.6%.
  • The 10-year U.S. Treasury Note yield declined 0.25% during January, ending the month at 3.60%. Investor concern over the strength of the global economic recovery led to greater demand for the safety of Treasury securities.
  • U.S. credit markets advanced during the month. High-quality “investment grade” bonds, as measured by the Barclays U.S. Credit Index, advanced 1.6% during January, largely due to the general decline in interest rates rather than an improvement in credit spreads.
  • The dollar strengthened 3% against the euro because of credit concerns in several Eurozone member countries, most notably Greece, Spain and Ireland.

Economics Highlights

  • Gross domestic product (GDP) advanced at an annual rate of 5.7% in the fourth quarter of 2009, but almost two-thirds of the increase was due to businesses’ investment in rebuilding inventories of goods. However, declines in retail sales and new home sales signal concern that the economic recovery may be unsustainable.
  • The Federal Reserve Bank (Fed) held firm on its low-interest rate policy, but members disagreed as to how long this policy should continue. The Fed restated its intention to stop purchasing mortgage-backed securities in March, even though the purchases have been critical to the housing industry rebound. Ben Bernanke survived a difficult political struggle to win confirmation for a second term as Fed chairman.
  • Growth in developing countries has been critical to global recovery. Economists are watching the impact of the withdrawal of government-sponsored stimulus programs around the world. Of particular interest is China, which reported 10.7% annual GDP growth in the fourth quarter. Economists believe China’s government may take measures to rein in lending and slow infrastructure projects to mitigate inflationary pressures.

Geopolitical Headlines

  • A crippling earthquake in Haiti resulted in over 230,000 deaths and spurred a massive worldwide relief program.
  • Massachusetts elected Republican Scott Brown to fill the Senate seat vacated by the death of Ted Kennedy. Election results were widely seen in the media as a referendum on President Obama’s health care initiative. The election gave Republicans the ability to block legislation through use of the filibuster.
  • In his State of the Union address, President Obama proposed further U.S financial regulation, including a tax on banks to recover government losses due to bailout programs. He also focused on the the need for job growth and relief efforts for small businesses.
  • U.S. technology firm Google revealed that it had been the victim of a cyber-attack in mid-December, which allegedly originated in China. Google is considering discontinuing offering its website in China.

Investment Fund Review

Inflation Protection Fund

Fund January
Inflation Protection Fund +0.3%
Barclays Capital Inflation Linked Index +1.6%
Difference -1.3%
  • The Inflation Protection Fund returned +0.3% for the month. The fund underperformed its benchmark in January by a margin of -1.3%. Both Treasury Inflation-Protected Securities (TIPS) and Global Inflation Bond strategies delivered positive returns. However, the fund’s allocation to commodities declined 5.3% in January and detracted from the overall fund return.

Domestic Bond Fund

Fund January
Domestic Bond Fund +1.5%
Barclays Capital U.S. Universal (ex MBS) Index +1.6%
Difference -0.1%
  • The Domestic Bond Fund returned +1.5% for the month of January, ending the month as the best-performing General Board fund. The investment-grade and affordable housing strategies delivered the highest absolute returns. For the month, the fund very slightly underperformed its benchmark by -0.1% as the fund’s exposure to non-investment-grade bonds and bonds denominated in currencies other than the U.S. dollar adversely impacted performance.

Domestic Stock Fund

Fund January
Domestic Stock Fund -3.8%
Russell 3000 -3.6%
Difference -0.2%
  • The Domestic Stock Fund returned -3.8% for the month of January. Virtually all strategies had negative returns. The fund underperformed its benchmark by a margin of -0.2%. Fourteen of the 15 actively managed portfolios underperformed their benchmarks.

International Stock Fund

Fund January
International Stock Fund -3.7%
MSCI ACWI x US -4.6%
Difference +0.9%
  • The International Stock Fund returned -3.7% for the month of January. In a month of negative performance for both developing and developed markets, the fund was able to outperform its benchmark by a margin of +0.9%. This was due to the better-than-benchmark performance of six of the eight actively managed portfolios in the fund.

Multiple Asset Fund

Fund January
Multiple Asset Fund -2.1%
Composite Benchmark -2.0%
Difference -0.1%
  • For the month, the Multiple Asset Fund underperformed its composite benchmark due to the relative underperformance of the Inflation Protection Fund, Domestic Stock Fund and Domestic Bond Fund, offset by the better-than-benchmark performance of the International Stock Fund.

Balanced Social Values Plus Fund

Fund January
Balanced Social Values Plus Fund -1.5%
Composite Benchmark -1.8%
Difference +0.3%


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