The following market commentary provides context for the investment performance of your charitable assets.

From Cambridge Associates, investment advisor

Risk assets posted strong returns in the first quarter. US equities (+10.3% for the MSCI US Index) led, touching new all-time highs on stronger-than-expected economic data and earnings, and continued AI-related enthusiasm. Fixed income assets (-2.1% for the Bloomberg Global Aggregate Bond Index), mostly faltered as investors repriced the pace of central bank policy rate cuts, causing yields to inflect higher.

US equities (+10.3%) outperformed developed market ex US equities (+5.6%), setting new all-time highs in the first quarter. Quarterly gains were more evenly spread across various sectors, moving beyond the usual dominance of information technology and communication services. Economic optimism was bolstered by strong indicators, including an upward revision of Q4 2023 GDP growth and a 19-month high for manufacturing PMI in February. A cooling labor market and higher-than-expected inflation rates tempered expectations for 2024 rate cuts. The Federal Reserve also revised its economic growth projections upwards and increased its inflation expectations for 2024.

Developed international equity advanced as well in the first quarter, driven by stronger economic and earnings growth. Developed Europe ex UK (+5.9%) posted robust returns as well, fueled by investor optimism of an improving economic environment after the ECB’s reduction in inflation outlook. The rally in equities was further supported by a dovish central bank stance, strong earnings reports, and indicators of economic stabilization. Emerging markets equities (+2.4%) lagged developed market peers. Though Asia led among major regions, China (-2.2%) could not hold the positive price momentum from February into March and lagged broad emerging markets.

US fixed income assets (-0.8%) mostly declined, reversing course from the stellar fourth quarter returns. Investors repriced the timing and magnitude of policy rate cuts to align with the Fed’s guidance on stronger-than-expected inflation. Yields expanded as investors delayed rate cut expectations on elevated inflation, resulting in fixed income assets lagging.

We continue to monitor portfolio exposures and review portfolio positioning carefully, rebalancing to remain in line with the targeted risk profile. The portfolios continue to remain well-diversified with ample liquidity.