February 2013 Investment Report


  • U.S. equities represented by the Russell 3000 Index increased 1.3% during the month. February was the fourth consecutive monthly gain for the index. Equity markets were largely unaffected by $85 billion in automatic government spending cuts set to begin on March 1. Year-to-date, the S&P 500 Index has increased 6.6%.
  • Large company “value” stocks gained 1.4% and outperformed the 1.2% return of large company “growth” stocks. Small company stocks as measured by the Russell 2000 Index gained 1.1% during the month, and small company stocks classified as value outperformed growth.
  • Developed international and emerging market equities declined during the month in U.S. dollar terms as the MSCI EAFE Index and the MSCI Emerging Markets IMI Index both declined by 1.0%.
  • The U.S. Treasury yield curve flattened modestly in February. The 2-year U.S. Treasury Note yield decreased by 0.03% to 0.24%, and the 10-year U.S. Treasury Note yield decreased by 0.11% to 1.88%. The long bond (30-year U.S. Treasury) decreased 0.09% in yield to 3.09%.
  • U.S. Treasury securities as measured by the Barclays U.S. Treasury Index increased 0.5% in February. Investment-grade debt as represented by the Barclays U.S. Credit Index increased 0.7% for the month. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 0.5%.
  • The U.S. dollar as measured by the U.S. Dollar Index increased 3.5% during February. The euro decreased 3.8% relative to the dollar amid euro zone economic weakness and Italian political uncertainty. The Japanese yen declined 0.9% relative to the dollar, and the British pound declined 4.4%. Moody’s downgraded Britain’s sovereign debt to Aa1 from Aaa in February due to the country’s increasing debt levels and poor economic growth.
  • Commodities as represented by the Dow Jones UBS Commodity Index decreased 4.1% in February. Market concerns about global economic weakness resulting from uncertainty from the Italian elections and the U.S. budget sequestration caused broad declines for the month across various types of commodities, with precious metals exhibiting the largest decline at 6.3%.

Economics Highlights

  • The Commerce Department revised upward its fourth quarter 2012 estimate of gross domestic product (GDP) to plus 0.1% from its original estimate of minus 0.1%.
  • Home prices grew by 6.8% on a year-to-year basis, which is the fastest pace since August 2006, according to the Case-Shiller report. Prices rose 0.9% in December, which was better than economists had forecasted. This report, along with federal housing data, demonstrated that the housing market is experiencing strong upward momentum.
  • Both France and Germany experienced negative fourth quarter GDP reports. Germany declined by 0.6% and France by 0.3%. This presents challenges for France in achieving its target for reducing its budget deficit in 2013.
  • Japan’s economy benefited from a shift in monetary policy that has weakened the yen. Exports rose for the first time in eight months as foreign buyers purchased cheaper Japanese products; nonetheless, Japan’s balance of trade position continues to deteriorate. The Nikkei Index achieved a four-year high, surpassed only by Greece on a local currency basis as the best-performing global equity index year to date.

Geopolitical Headlines

  • Equity markets around the world initially reacted positively when it appeared that Pier Luigi Bersani was going to win the election in Italy. However, when results revealed that Bersani won by only a thin margin and would probably be unable to form a government, the markets quickly changed direction. If Bersani is unable to form a government, Italians will need to conduct another election within a few months.
  • The U.S. budget sequestration took effect on March 1. If politicians in Washington are unable to reach agreement on spending cuts and new taxes, automatic across-the-board federal spending cuts of $85 billion will go into effect. The Pentagon began preparing for billions of dollars in spending reductions by cutting back deployments and purchases of military equipment. Up to one million federal workers could be affected in some way.
  • John Kerry replaced Hillary Clinton as U.S. Secretary of State. Previously Kerry served as the chair of the Senate Foreign Relations Committee. One of his first challenges will be to address the war in Syria.
  • The Senate confirmed Chuck Hagel as Secretary of Defense. The vote was the narrowest confirmation margin on record for a defense secretary.
  • In his State of the Union address, President Obama outlined his agenda for the remainder of his term that included infrastructure spending, an increase in the minimum wage, preschool programs for lower and middle class families, gun control and climate change initiatives.
  • The U.S. government brought a civil lawsuit against rating agency Standard & Poor’s (“S&P”), alleging S&P did not apply changes to its subprime credit models before the financial crisis because it feared losing business. S&P repudiated the charges, stating “hindsight is no basis to take legal action against the good faith opinions of professionals.” The lawsuit asks for $5 billion in restitution and has the potential to increase if other entities join the suit.
  • Pope Benedict XVI became the first pontiff in 600 years to resign from his post. He stated that, at the age of 85, he lacked the vitality to perform his duties.

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 February Year-to-Date
Inflation Protection Fund -0.49% -0.18%
Barclays Capital U.S. Government Inflation-Linked Bond Index +0.02% -0.74%
Difference -0.51% +0.56%
  • The Inflation Protection Fund declined 0.49% in February and underperformed the fund benchmark by 0.51%. Only one of the fund’s four diversifying strategies positively contributed to the fund’s benchmark-relative performance during the month. The fund’s 10% allocation to commodities detracted the most from benchmark-relative performance, declining 4.1% primarily due to falling energy prices. Bonds denominated in currencies other than the U.S. dollar also detracted from performance as the dollar strengthened relative to foreign currencies.
  • For the year to date, the fund has declined 0.18% but has outperformed its benchmark by 0.56%. Three of the fund’s four diversifying strategies have added value relative to the benchmark, with commodities as the lone exception.

Fixed Income Fund

Fund February Year-to-Date
Fixed Income Fund +0.27% +0.10%
Barclays Capital U.S. Universal (ex MBS) Index +0.53% -0.01%
Difference -0.26% +0.11%
  • The Fixed Income Fund gained 0.27% in February but underperformed the fund benchmark return by 0.26%. The best-performing strategy for the month was the fund’s 10% allocation to positive social purpose loans, which gained 1.2%. The portfolio benefited from the general decline in interest rates for U.S. Treasury securities as the value of the of the fund’s positive social purpose loans are closely linked to U.S. Treasury yields. Because of U.S. dollar strength, the fund’s two portfolios comprised of fixed income instruments denominated in foreign currencies both declined and detracted from performance.
  • For the year to date, the Fixed Income Fund has a fractional gain of 0.10% and it has slightly outperformed its benchmark. The fund’s two allocations to below-investment-grade debt have both gained about 1.8% and positively contributed to benchmark-relative performance. The fund’s allocation to global bonds has declined 1.5% and detracted from performance.

U.S. Equity Fund

Fund February Year-to-Date
U.S. Equity Fund +1.06% +6.79%
Russell 3000 +1.33% +6.89%
Difference -0.27% -0.10%
  • The U.S. Equity Fund gained 1.06% in February and underperformed the fund’s Russell 3000 Index benchmark. The fund’s allocation to real estate investment trusts (REITs) gained 0.1% and detracted from performance. In addition, the fund’s 10% allocation to private equity and private real estate gained 0.3% during the month, further detracting from benchmark-relative performance.
  • For the year to date, the fund has gained 6.79% and it slightly trails its benchmark return by 0.10%. The fund’s 10% allocation to alternative investments has gained 1% and detracted from performance. In addition, the fund’s REIT allocation has gained 3.1% and detracted from performance. Good benchmark-relative performance by most of the fund’s active managers, however, has nearly fully offset the negative benchmark-relative performance of the fund’s alternative investments allocation.

International Equity Fund

Fund February Year-to-Date
International Equity Fund -0.60% +3.35%
MSCI ACWI ex US -0.87% +3.19%
Difference +0.27% +0.16%
  • The International Equity Fund declined 0.60% in February and outperformed its benchmark return by 0.27%. The fund benefited from its 6% allocation to international REITs, which gained 0.5% for the month. The fund also benefited from a lower-than-benchmark allocation to stocks of companies domiciled in the European Union. These stocks declined in value in the wake of uncertainty resulting from Italy’s election.
  • For the year to date, the International Equity Fund has gained 3.35% and slightly outperformed its benchmark by 0.16%. The fund’s allocation to small international companies has gained 5.4% and has positively contributed to the fund’s benchmark-relative performance.

Multiple Asset Fund

Fund February Year-to-Date
Multiple Asset Fund +0.37% +3.65%
Composite Benchmark +0.56% +3.65%
Difference -0.19% +0.00%
  • For February, the Multiple Asset Fund gained 0.37% but underperformed its fund benchmark, with three of the fund’s four strategies underperforming their respective benchmarks.
  • For the year, the Multiple Asset Fund has gained 3.65%, matching the performance of the fund benchmark. Three of the fund’s four strategies have positively contributed to benchmark-relative performance, and the U.S. Equity Fund has detracted from benchmark-relative performance.

Balanced Social Values Plus Fund

Fund February Year-to-Date
Balanced Social Values Plus Fund +1.22% +5.01%
Composite Benchmark +1.06% +4.77%
Difference +0.16% +0.24%


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