November 2012 Investment Report


  • U.S. equities represented by the Russell 3000 Index increased 0.8% in November. The market declined sharply in the week immediately following the U.S presidential election, but rebounded by month-end. U.S. equities have increased in five of the last six months and have gained 15.0% year-to-date.
  • Stocks with strong earnings growth significantly outperformed those classified as “value.” One interesting bellwether is Facebook, which after its disappointing initial public offering (IPO) in May and subsequent decline of 60% through mid-September, increased 32.6% during the month on positive growth prospects.
  • Developed country international equities as measured by the MSCI EAFE Index increased 2.4% in November. Investors favored the perceived lower risk of developed markets over emerging markets, which gained 1.3% as measured by the MSCI Emerging Markets IMI index.
  • Yields declined modestly across the U.S. Treasury yield curve in November. The 2-year U.S. Treasury Note yield decreased by 0.04% (4 basis points) to 0.25%. The 10-year U.S. Treasury Note yield decreased by 0.08% (8 basis points) to 1.62%. The long bond (30-year U.S. Treasury) decreased 0.05% (5 basis points) in yield to 2.81%.
  • Investment-grade debt as represented by the Barclays U.S. Credit Index was unchanged for the month, as weakness in the industrial and utility sectors offset strength in the financial and foreign government sectors. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 0.8%, outperforming the investment-grade index by 0.8%. U.S. Treasury securities as measured by the Barclays U.S. Treasury Index increased 0.5% in November, reflecting investors’ benign inflation outlook and the modestly lower yield curve.
  • The U.S. dollar as measured by the U.S. Dollar Index increased 0.3% during November, largely due to weakness in the Japanese yen resulting from expectations of a change in Japanese monetary policies leading to higher levels of inflation. The euro and Swiss franc strengthened modestly versus the dollar, offset by weakness in the British pound, Swedish krona and Japanese yen. The yen decreased 3.3% versus the dollar during November.
  • Commodities as represented by the Dow Jones UBS Commodity Index increased fractionally in November. Industrial metals increased 7.0% and offset decreases in grains and other agricultural products of 3.5% and 2.8% respectively.

Economics Highlights

  • Republicans and Democrats in Congress remain at a standoff in their efforts to achieve a budget deal and avoid $607 billion of automatic tax increases and spending cuts from occurring early next year. This draconian set of measures has been called a “fiscal cliff” for its anticipated negative impact on the economy and markets. The fiscal cliff threat is stimulating increased stock sales, IPOs and merger activity at year end as investors take profits ahead of potentially higher taxes on dividends and capital gains.
  • Despite the government’s recent upward revision of third quarter gross domestic product (GDP) to 2.7% from 2%, the economy remains sluggish. Growth in consumer spending has weakened, while business investment has declined. Growth drivers included housing—a positive contributor to GDP for six quarters—and automotive sales, which reached the highest level since January 2008.
  • Europe continues to be a source of volatility for world markets. Early in November, the Paris-based Organization for Economic Cooperation and Development (OECD) lowered its 2013 forecast for economic growth to 1.4% from 2.2% for developed nations including U.S., Japan and the euro zone. In addition, Moody’s downgraded France’s credit rating below AAA. On a positive note, European finance ministers representing the largest Greek creditors agreed to steps to help reduce Greece’s debt to 124% of GDP by 2020 from its current 170% level.
  • An International Energy Agency report predicted that the U.S. could become the world’s largest oil producer by 2020, surpassing Saudi Arabia and Russia, as a result of expanding shale-oil reserves.

Geopolitical Headlines

  • President Obama was re-elected to a second term, defeating Republican challenger, Mitt Romney, in both the popular (51%/47%) and electoral college (62%/38%) votes.
  • In a once-a-decade power transition, the Chinese Communist Party appointed Xi Jinping as its new premier. Mr. Xi confronts a variety of challenges including slowing economic growth, corruption within party ranks, and increasing social unrest related to rising income inequality among the urban and rural populations.
  • Tension in the Middle East continues. After the exchange of missiles between Israel and the Palestinians in the Gaza Strip and a threatened land invasion by Israeli army forces, Egypt and the U.S. brokered a ceasefire, which halted further escalation of the potentially destabilizing conflict.

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:–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 November Year-to-Date
Inflation Protection Fund +0.87% +7.63%
Barclays Capital U.S. Government Inflation-Linked Bond Index +0.49% +8.04%
Difference +0.38% -0.41%
  • The Inflation Protection Fund advanced 0.87% in November and outperformed the fund benchmark by 0.38%. All of the fund’s diversifying strategies positively contributed to the fund’s benchmark-relative performance. The fund’s 30% allocation to global inflation-protected government bonds advanced approximately 1.6%. Bonds denominated in currencies other than the U.S. dollar benefited from dollar weakness relative to most foreign currencies.
  • For the year to date, the fund has gained 7.63% but has underperformed its benchmark by 0.41%. One of the fund’s diversifying strategies—its 10% allocation to bonds of developing countries—has gained 16.7% 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 5.5% and 6.4% returns for the year to date have failed to keep pace with the fund benchmark.

Fixed Income Fund

Fund November Year-to-Date
Fixed Income Fund +0.73% +9.19%
Barclays Capital U.S. Universal (ex MBS) Index +0.38% +6.63%
Difference +0.35% +2.56%
  • The Fixed Income Fund gained 0.73% in November and outperformed the fund benchmark return by 0.35%. The best-performing strategy for the month was the fund’s 11% allocation to positive social purpose loans, which gained 1.8%. When assessing the fair market value of the loans in this strategy, fund management relies on third-party-provided market values for comparable risk securities. This process may cause changes in market values for positive social purpose loans to lag behind more liquid fixed income instruments. In addition, the fund’s allocation to bonds of developing countries gained 1.6% primarily due to the currencies of developing countries appreciating relative to the U.S. dollar. The fund’s largest investment manager, PIMCO, also contributed to the fund’s better-than-benchmark performance by surpassing its benchmark by 0.4% for the month.
  • For the year to date, the Fixed Income Fund has gained 9.19% and has meaningfully outperformed its benchmark by 2.56%. All but one 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 4.2% 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 11% so far in 2012. The fund's allocation to debt from developing countries, the fund's high-yield bond allocation, and the fund's allocation to opportunistic credit gained 16.4%, 12.1% and 11.5% respectively.

U.S. Equity Fund

Fund November Year-to-Date
U.S. Equity Fund +0.88% +13.25%
Russell 3000 +0.77% +15.01%
Difference +0.11% -1.76%
  • The U.S. Equity Fund gained 0.88% in November and slightly outperformed the fund’s Russell 3000 Index benchmark. The fund generally benefited from the excess benchmark-relative performance by the fund’s managers that emphasize the selection of stocks based on expected earnings growth. The fund’s allocation to publicly traded real estate investment trusts (REITs) declined 0.2% and detracted from benchmark-relative performance.
  • For the year to date, the fund has gained 13.25% but trails its benchmark return by 1.76%. The fund’s allocation to alternative investments and poor stock selection on the part of two growth-oriented large cap managers in health care, technology and consumer discretionary sectors detracted from the fund’s benchmark-relative performance.

International Equity Fund

Fund November Year-to-Date
International Equity Fund +2.15% +16.06%
MSCI ACWI ex US +1.77% +13.04%
Difference +0.38% +3.02%
  • The International Equity Fund advanced 2.15% in November and outperformed its benchmark return by 0.38%. The fund benefited from its 7% allocation to international REITs, which gained 3.2% for the month. It also benefited from excellent benchmark-relative performance by two of the fund’s managers.
  • For the year to date, the International Equity Fund has gained 16.06% and has meaningfully outperformed its benchmark by 3.02%. 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 38% and 20% respectively for the year to date. In addition, the fund’s seven active managers collectively have significantly exceeded their respective performance benchmarks.

Multiple Asset Fund

Fund November Year-to-Date
Multiple Asset Fund +1.09% +12.16%
Composite Benchmark +0.85% +12.03%
Difference +0.24% +0.13%
  • For November, the Multiple Asset Fund gained 1.09% and outperformed its fund benchmark, with all four funds positively contributing to benchmark-relative performance.
  • For the year to date, the Multiple Asset Fund has gained 12.16% and has slightly outperformed the 12.03% return of the fund benchmark. The Fixed Income Fund and International Equity Fund have positively contributed to benchmark-relative performance, whereas the benchmark-relative performance of the Inflation Protection Fund and U.S. Equity Fund has detracted from the Multiple Asset Fund’s benchmark-relative performance.

Balanced Social Values Plus Fund

Fund November Year-to-Date
Balanced Social Values Plus Fund +0.56% +8.55%
Composite Benchmark +0.46% +7.95%
Difference +0.10% +0.60%


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