November 2010 Investment Report


  • U.S. equities, represented by the Russell 3000 Index, advanced 0.6% for the month of November. The markets initially reacted positively to Federal Reserve (Fed) Chairman Ben Bernanke’s plan to stimulate the economy through additional purchases of U.S. Treasury securities (commonly referred to as “QE2”). However, the equity markets demonstrated significant volatility throughout the month because of many developments, including negative international reaction to the Fed’s stimulus plans, mixed economic data, Chinese efforts to slow its economy and, finally, the “eurozone” debt crisis.
  • Small-company U.S. equities outperformed large-company U.S. equities. For both groups, companies with strong earnings growth performed better than equities classified as “value.”
  • International equities declined during November. Markets reacted negatively to continued sovereign debt concerns. As a result, the U.S. dollar strengthened against major foreign currencies, resulting in lower relative returns for international equities. The bellwether MSCI EAFE Index, which measures performance of developed-country equities in U.S. dollar terms, declined 4.8%. Equities of developing countries, as measured by the MSCI Emerging Markets Index, declined 2.6%.
  • Treasury yields on all maturities increased in November. Initially, the value of Treasury securities declined on signs of economic improvement and subsequent to the Fed’s widely anticipated stimulus announcement. However, near the end of the month, Treasury yields declined (meaning prices increased) as investors sought the safety of U.S. government debt following the spread of the eurozone credit crisis to Ireland. For November, the interest rate of 10-year treasuries increased 18 bps to 2.81%.
  • After five months of positive performance, U.S. credit fixed income securities, as measured by the Barclays Capital US Credit Index, declined 1.0% for the month.

Economics Highlights

  • The U.S. government revised real Gross Domestic Product (GDP) estimates upward for the third quarter to 2.5% (vs. 1.7% in the June quarter), helping to alleviate concerns about a “double-dip” recession.
  • Fed officials, however, held a more pessimistic view of economic prospects as they began implementation of their large-scale “quantitative easing” program. This program of purchasing U.S. Treasury securities is intended to expand the money supply, reduce interest rates and reinvigorate the economy. Several foreign leaders spoke out against the program due to the possibility of a weaker dollar’s impact on countries for which the U.S. is a major export market and the potential for higher inflation in foreign economies.
  • The economy added only 50,000 new private sector jobs during the month of November, which was below expectations and caused the overall unemployment rate to jump back to 9.8% from its previous level of 9.6%.
  • “Black Friday,” so named because it is the traditional beginning of the holiday season and marks the occasion when retailers’ profitability turns “black,” had greater retail sales volume compared with last year. Online commerce increased its share of overall sales, growing by nearly 16% year-over-year for the holiday weekend.
  • Manufacturing continues to be a bright spot in the economy. The Institute for Supply Management (ISM) manufacturing index registered 56.6, its second strongest reading in the past six months. General Motors completed a successful initial public offering (IPO) of its stock, marking a successful turnaround of the automaker after a 2008 government bailout.

Geopolitical Headlines

  • The European debt crisis returned to headlines at month-end with the announcement of a $90 billion bailout of the Irish banking system. With concerns about solvency arising in other countries such as Spain, Portugal, Italy and Belgium, regulators proposed rules that future bailouts should involve not just government rescue but also assistance from private creditors.
  • The Federal Bureau of Investigation (FBI) raided the offices of three hedge funds and seized records as part of a wide-ranging probe of insider trading activities. Several other large firms have received requests for trade information.
  • North Korea launched an artillery strike against an inhabited South Korean island, allegedly in response to military maneuvers conducted by South Korean marines.

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: Bloomberg,

Investment Fund Review

Inflation Protection Fund

Fund November Year-to-Date
Inflation Protection Fund -1.3% +8.3%
Barclays Capital U.S. Government Inflation-Linked Bond Index -1.7% +8.0%
Difference +0.4% +0.3%
  • The Inflation Protection Fund outperformed its benchmark, as all of the fund’s diversifying strategies added value relative to the fund benchmark. The fund’s allocation to commodities produced a positive return of slightly less than 1%. U.S. Inflation-Protected Securities declined after very strong performance in October.
  • For the year, the fund has slightly outperformed its benchmark. Two of the fund’s diversifying strategies—commodities and inflation-linked bonds from developing countries—have both returned approximately 15% for the year through November and have positively contributed to the fund’s relative performance. The fund’s allocation to inflation-linked bonds from developed countries, however, has detracted from performance because of the relative strength of the U.S. dollar in 2010.

Fixed Income Fund

Fund November Year-to-Date
Fixed Income Fund -1.8% +8.8%
Barclays Capital U.S. Universal (ex MBS) Index -0.8% +9.1%
Difference -1.0% -0.3%
  • The Fixed Income Fund produced disappointing benchmark-relative performance in November, as nearly all of the fund’s diversifying strategies detracted from performance. Specifically, the fund’s allocation to global bonds declined 4% because of strength in the U.S. dollar. In addition, the fund’s allocation to positive social purpose loans declined 2%.
  • For the year, the fund is modestly underperforming its benchmark primarily because of the fund’s allocation to international bonds denominated in foreign currencies. This is due to the U.S. dollar’s strength resulting from the ongoing credit crisis in Europe. In addition, although the fund’s allocation to positive social purpose loans has produced good returns, they have returned less than the fund benchmark. The fund’s allocation to higher risk fixed income securities has contributed positively to fund performance.

U.S. Equity Fund

Fund November Year-to-Date
U.S. Equity Fund +1.1% +10.8%
Russell 3000 +0.6% +9.5%
Difference +0.5% +1.3%
  • The U.S. Equity Fund outperformed its benchmark in November primarily due to its higher-than-benchmark allocation to small and mid-sized companies. The Russell 2000 Index of small companies gained 3.5%, whereas large company stocks represented by the S&P 500 were flat for the month. The fund’s allocation to public real estate investment trusts (REITs) partially offset the excess performance attributable to small and mid-sized company stocks. An index of public REITS declined 1.6% for the month.
  • For the year, the fund’s performance is comfortably ahead of its benchmark, again primarily as a result of the fund’s higher-than-benchmark allocation to small and mid-sized companies. The Russell 2000 Index has gained 17.5% for the year, compared with the 7.8% return of the S&P 500. Despite November’s decline, the fund’s allocation to public REITs contributed to better-than-benchmark performance with its 24% gain. Through the end of November, active management has modestly contributed to the fund’s excess performance, with nine of the fund’s 15 active strategies outperforming their benchmarks. Three of the fund’s managers have outperformed their benchmark by 7% or greater, whereas only one investment manager (with the smallest amount of assets managed) underperformed its benchmark by more than 7%.

International Equity Fund

Fund November Year-to-Date
International Equity Fund -2.5% +7.4%
MSCI ACWI x US -3.7% +4.3%
Difference +1.2% +3.1%
  • Although the International Equity Fund declined by 2.5% in November, the fund meaningfully exceeded the performance of its benchmark, as all but one of the fund’s eight strategies outperformed their respective benchmarks. This is primarily attributable to a generally lower-than-benchmark allocation to European companies, which have been adversely affected by the European debt crisis. In addition, the fund’s private international real estate investments recognized gains of 11% for the month. However, the fund’s investment in publicly traded international REITs declined approximately 5% and negatively contributed to the fund’s benchmark-relative performance.
  • For the year, the fund remains meaningfully ahead of its benchmark because of its allocation to small-sized international companies, stocks from developing countries and its holdings of international public real estate securities. In addition, the fund’s managers have collectively produced excellent benchmark-relative performance for the 11 months of 2010.

Multiple Asset Fund

Fund November Year-to-Date
Multiple Asset Fund -0.6% +9.4%
Composite Benchmark -0.9% +8.7%
Difference +0.3% +0.7%
  • The Multiple Asset Fund outperformed its performance benchmark in November, as three of the funds outperformed their respective benchmarks.
  • For the year, the Multiple Asset Fund has outperformed its benchmark primarily because of the better-than-benchmark performance of the two equity funds.

Balanced Social Values Plus Fund

Fund November Year-to-Date
Balanced Social Values Plus Fund -0.5% +5.2%
Composite Benchmark -0.2% +5.6%
Difference -0.3% -0.4%


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