The following market commentary provides context for the investment performance of your charitable assets.
From Cambridge Associates, investment advisor
Global equities (-3.4% for the MSCI ACWI) and bonds (-3.6% for the Bloomberg Global Aggregate Bond Index) sold off in third quarter, as rising bond yields and higher-for-longer central bank rhetoric pressured performance. While the upward trajectory for bond yields occurred on a global scale, the United States saw some of the largest increases, driven by an upward repricing of Federal Reserve rate expectations, resilient economic performance, and news of increased Treasury issuance. Indeed, US ten-year Treasury yields rose to 16-year highs. Within global equities, information technology, consumer staples, and bond-proxy sectors—such as utilities and real estate—declined the most, whereas higher oil price led to sharp gains for energy stocks.
US equities (-3.2% for the MSCI US Index) bested developed markets ex US peers (-4.1% for the MSCI World ex US Index), aided by a stronger US dollar. A sharp rise in US Treasury yields weighed on the tech-heavy market. Information technology (-5.5%) accounted for nearly half of the drop in third quarter, as Chinese officials banned iPhone use for government workers, contributing to sharp declines in Apple’s stock price. Real estate (-9.2%), utilities (-9.2%), and consumer staples (-6.1%) declined the most, while energy (+12.1%) surged on rising oil prices. Value narrowly outperformed growth for the first time in 2023 but remained well behind year-to-date (YTD). Small caps trailed large caps for the ninth time in the past ten quarters.
US fixed income performance (-3.2% for the Bloomberg US Aggregate Bond Index) faltered as US Treasury yields soared. The ten-year yield rose 78 bps to 4.59%, reaching its highest levels since 2007, with the move driven mostly by rising real yields (+65 bps to 2.24%). High-yield corporates (0.5%) held onto their tight credit spreads, outperforming Treasuries and investment-grade corporate peers (both -3.1%). Treasuries are now on pace for their third consecutive annual decline, with performance down 1.5% YTD.
We continue to monitor portfolio exposures and review portfolio positioning carefully, ensuring the portfolios remain in line with the targeted risk profile. The portfolios continue to remain well-diversified with ample liquidity.