July 2013 Investment Report


  • Equity markets improved as the U.S. Federal Reserve (the Fed) reassured the markets of continuing stimulus. U.S. equities represented by the Russell 3000 Index increased 5.5% during July. All Russell 3000 sectors gained during the month; health care was a top performer, up 7.8%.  The S&P 500 Index of large company stocks has gained 19.6% year-to-date. 
  • The Russell 2000 Index of small companies gained 7.0%. Small company stocks with strong earnings growth gained 7.6% and outpaced value stocks. For the year, the Russell 2000 Index has gained 24.0%.
  • Developed country international equities as measured by the MSCI EAFE Index gained 5.3% during the month. Emerging market equities as measured by the MSCI Emerging Markets Index continued to lag, gaining only 1.0% during the month. Year-to-date, emerging market equities have declined 8.0% while developed markets have gained 10.0%.
  • The U.S. Treasury yield curve steepened in July. The 2-year U.S. Treasury Note yield decreased by 0.05% to 0.31% after U.S. Federal Reserve Chairman Ben Bernanke reassured investors that the expected tapering of the Fed’s asset purchase program does not signal an end to its highly accommodative monetary policy, which is designed to provide economic stimulus. The 10-year U.S. Treasury Note yield increased by 0.09% to 2.58% during the month, and the long bond (30-year U.S. Treasury) increased 0.14% in yield to 3.64%.
  • U.S. Treasury securities as measured by the Barclays U.S. Treasury Index decreased 0.1% in July. Investment-grade debt as represented by the Barclays U.S. Credit Index increased 0.7% for the month, outperforming Treasuries as credit spreads tightened due to Federal Reserve assurances that monetary policy will remain adequately accommodative. Below-investment-grade debt as measured by the Barclays U.S. Corporate High-Yield Index increased 1.9%, outperforming investment-grade credit. Developing nation local currency debt as measured by the JPMorgan Government Bond Index-Emerging Markets increased 0.7% in July on an un-hedged U.S. dollar basis, approximating the performance of the U.S. Credit Index.
  • The U.S. dollar as measured by the U.S. Dollar Index decreased 2.0% in July. During the month, the euro increased 2.2% relative to the dollar, and the Japanese yen increased 1.3%. The Australian dollar decreased 1.7% in July and 13.6% for the year-to-date, bringing its value relative to the U.S. dollar to the lowest level in almost three years. The decline in global commodity prices has hindered profitability in Australia’s mining industry, and further currency weakness has resulted from the Australian central bank lowering interest rates to promote economic growth. Currencies of developing countries were mixed as the Mexican peso increased 1.6% and the Brazilian real decreased 2.0% relative to the dollar.
  • Commodities as represented by the Dow Jones UBS Commodity Index increased 1.4% in July, but the index has declined 9.3% for the year-to-date. Petroleum and precious metals were the strongest sectors during the month, and increased 8.1% and 5.6%, respectively. Grains were the weakest sector and decreased 4.2%.

Economics Highlights

  • Both equity and fixed income markets gained early in the month as Federal Reserve Chairman Ben Bernanke and St. Louis Fed President James Bullard assured the public that the Fed would act prudently with regard to “tapering.” During his testimony before the House Financial Services Committee, Bernanke made clear the need for the Fed to provide further monetary accommodation (stimulus) due to continued high unemployment levels. He stressed that the Fed’s actions depend on the strength or weakness of published economic data and that the Fed would provide additional stimulus if economic growth were to slow.
  • Second quarter gross domestic product (GDP) growth was stronger than expected, although the positive news was muted by downward revisions to first-quarter GDP. Second-quarter GDP grew by 1.7%, led by strength in nonresidential fixed investment and exports. First-quarter GDP was revised down from 1.8% to 1.1%. Annual revisions were also reported, raising the average 2012 growth from 2.2% to 2.8%. Some of the revision can be attributed to a comprehensive change in the methodology for processing and analyzing the data since 1929. The economic contribution from the production of intangible assets such as research and development, entertainment and the arts are now included in the GDP data.
  • Mario Draghi, president of the European Central Bank (ECB), broke with tradition by announcing that the ECB would keep interest rates low for the foreseeable future. The ECB also said that it would keep its overnight borrowing rate unchanged at 0.5%. This announcement is particularly notable because the bank historically has been noncommittal to any future plans. It is believed the reasoning behind this change in protocol was the political crisis in Portugal, where the coalition Portuguese government seemed on the brink of collapse, threatening the continuation of what observers view as successful austerity measures. Later in the month, the president of Portugal eventually retracted his call for early elections. European equity markets advanced after the announcement.

Geopolitical Headlines

  • The City of Detroit filed for bankruptcy in an attempt to restructure its $18 billion debt. Detroit is the largest American city to ever file for bankruptcy. Reduction in revenue due to the population diminishing by almost 50% from the peak, along with mismanagement of funds, are cited as the main causes for Detroit’s economic failure. City employees are at risk of seeing cuts in their pensions and other benefits. Currently, the general retirement system is only 58.6% funded. Of the $18 billion in debt, $3.5 billion is owed to the city’s pensions and $6.4 billion is owed for other employee benefits.
  • Panamanian officials seized a North Korean ship that was smuggling weapons from Cuba to North Korea. Cuba claims it was sending the weapons to North Korea for repair along with 10,000 pounds of sugar that it intended to use for payment. The ship was cornered in a narrow waterway while approaching the Panama Canal. The captain of the ship attempted suicide when the Panamanian Navy boarded the ship.
  • The Egyptian military under the leadership of General Abdulfattah al-Sisi overthrew President Mohammed Morsi, the first elected president of Egypt. The Egyptian military put in place an interim government, led by Adly Mansour, to rewrite the constitution and start the process of setting up new elections. The Muslim Brotherhood, from which Morsi initially gained political presence, immediately began protesting removal of the president. The protests and sit-ins have caused fatal clashes between different factions of Egypt’s population. The Obama administration has not referred to the takeover as a coup, which would have canceled continued aid money to Egypt’s military.
  • The Obama administration delayed enforcing a provision of the Affordable Care Act (the nation’s health care reform legislation) requiring that large employers provide coverage for its employees or pay a fine. The administration said it was providing companies with more time to adjust to provisions in the law, but hoped that companies would voluntarily comply earlier. Enforcement was delayed from January 2014 to January 2015.

Sources: Bloomberg News, the Economist, the Wall Street Journal, CNBC, CNN, Associated Press, Reuters and Bridgewater Associates

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 July Year-to-Date
Inflation Protection Fund +0.83% -5.51%
Barclays Capital U.S. Government Inflation-Linked Bond Index +0.68% -7.21%
Difference +0.15% +1.70%
  • The Inflation Protection Fund rebounded from two consecutive months of poor performance as Fed Chairman Bernanke assured nervous investors that Fed intervention would not end as soon as some expected. The fund gained 0.83% and modestly outperformed its benchmark by 0.15%. Three of the fund’s four diversifying strategies delivered better than benchmark performance, with the fund’s 10% allocation to commodity futures contracts advancing 2.5%. The fund’s allocation to inflation-linked debt from developing countries declined 0.1%, which represents a third consecutive monthly decline.
  • For the year to date, the Inflation Protection Fund has declined -5.51% but has outperformed its benchmark by 1.70%. Three of the fund’s diversifying strategies contributed positively to benchmark-relative performance. The best-performing strategy was the fund’s allocation to floating rate senior secured loans, which has gained 3.3% so far in 2013. The fund’s allocation to inflation-linked bonds of developed countries has also added value, declining only 2.8% year-to-date. The fund’s allocation to inflation-linked debt from developing countries has declined 11.3% and has detracted from benchmark-relative performance.

Fixed Income Fund

Fund July Year-to-Date
Fixed Income Fund +0.69% -2.03%
Barclays Capital U.S. Universal (ex MBS) Index +0.46% -1.93%
Difference +0.23% -0.10%
  • The Fixed Income Fund also reversed its significant two consecutive month decline and advanced 0.69% in July. The fund outperformed its benchmark return by 0.23%. The fund’s two allocations to below-investment-grade bonds contributed most to the fund’s positive benchmark-relative performance, gaining nearly 2%. Bonds denominated in currencies other than the U.S. dollar also contributed positively to relative performance, as the U.S. dollar weakened compared to several foreign currencies.
  • For the year to date, the Fixed Income Fund has declined 2.03% and has slightly underperformed the fund benchmark by 0.10%. The fund’s two allocations to below-investment-grade debt have gained about 4% and contributed positively to benchmark-relative performance. In addition, the fund’s allocation to positive social purpose loans has gained 2.2% and positively contributed to benchmark-relative performance. The fund’s allocation to bonds from developing countries detracted the most from performance, declining 7.2%.

U.S. Equity Fund

Fund July Year-to-Date
U.S. Equity Fund +5.48% +20.32%
Russell 3000 +5.48% +20.31%
Difference +0.00% +0.01%
  • The U.S. Equity Fund produced a strong 5.48% return in July and exactly matched the fund’s Russell 3000 Index benchmark. The fund’s greater-than-benchmark allocation to the stocks of small and mid-sized companies contributed to positive benchmark-relative performance, as the Russell 2000 Index of small companies returned 7.0% compared to the S&P 500 Index return of 5.1%. The fund’s 3% allocation to real estate investment trusts (REITs) detracted from performance, gaining only 0.3%. The fund’s 7% allocation to alternative investment also detracted from benchmark-relative performance, as it typically does during periods of strong public market performance.
  • For the year to date, the U.S. Equity Fund has gained 20.32%, which is 0.01% better than the fund’s benchmark return. The fund’s active managers have collectively outperformed their respective benchmarks, benefiting from their collective higher-than-benchmark allocations to small and mid-sized companies. The Russell 2000 Index has gained 24.0% through July. The fund’s best-performing manager exceeds its performance benchmark by more than 17 percentage points for the year-to- date, whereas the fund’s worst-performing manager has only underperformed by about five percentage points. The fund’s allocations to the alternative investment strategies of private equity and private real estate have gained 3.1% and 7.3% respectively compared to the strong returns from the public equity markets, offsetting the positive contributions from the fund’s active managers.

International Equity Fund

Fund July Year-to-Date
International Equity Fund +4.71% +5.53%
MSCI ACWI ex US +4.45% +4.64%
Difference +0.26% +0.89%
  • The International Equity Fund gained 4.71% in July and outperformed its benchmark return by 0.26%. The fund again benefited from its less-than-benchmark allocation to stocks from developing countries, as the MSCI Emerging Markets Index gained only 1% compared to the 5.3% MSCI EAFE Index of stocks from developed countries. The fund’s international growth manager outperformed its benchmark by 3.8%, which also added to the fund’s better-than-benchmark performance. The fund’s 6% allocation to international REITs gained only 2.9% and detracted from performance compared to the benchmark.
  • For the year to date, the International Equity Fund has gained 5.53% and has outperformed its benchmark return by 0.89%. The fund’s allocation to small international companies has gained 10.4% and positively contributed to the fund’s benchmark-relative performance. The fund has also benefited from its below-benchmark allocation to the stocks of developing countries, as the MSCI Emerging Markets Index has declined 8.0% so far this year. The fund’s allocation to international real estate investment trusts has only gained 0.9% and modestly detracted from benchmark-relative performance.

Multiple Asset Fund

Fund July Year-to-Date
Multiple Asset Fund +3.64% +8.89%
Composite Benchmark +3.54% +8.45%
Difference +0.10% +0.44%
  • For July, the Multiple Asset Fund (MAF) gained 3.64% and outperformed its fund benchmark by 0.10%. Except for the U.S. Equity Fund, which exactly matched its performance benchmark, the fund’s other three strategies all contributed positively to benchmark-relative performance.
  • For the year-to-date, the Multiple Asset Fund has gained 8.89% and outperformed its benchmark return by 0.44%. The Inflation Protection Fund and the International Equity Fund have both contributed positively to benchmark-relative results; the U.S. Equity Fund has neither added nor detracted; and the Fixed Income Fund modestly detracted from relative performance.

Balanced Social Values Plus Fund

Fund July Year-to-Date
Balanced Social Values Plus Fund +2.46% +12.78%
Composite Benchmark +2.51% +12.58%
Difference -0.05% +0.20%


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