What we saw: Global equities rebounded from a mild pullback in April to extend their rally into the second quarter, once again led by US domestic large cap growth stocks. Stable economic conditions across most developed nations supported corporate earnings, resulting in a period of low volatility in most markets.   

After 2022’s bear market, the share prices of the seven largest US companies measured by market capitalization have tripled, dominated indexed-based returns and concentrated returns in the US-based technology sector. US domestic return performance was mixed in other areas representing non-tech, medium and small companies.  

While major international economies are at different stages of natural economic growth and contraction, the overall conditions of most developed nations remained favorable and emerging markets showed signs of life. Fixed income returns were generally flat against the backdrop of a slight upward move in interest rates.  

Looking forward: The continued positive trajectory has stock valuations looking expensive by historical measures. Many analysts expect most global equity markets to continue the positive momentum in the short term supported by relatively steady macro-economic factors across developed nations.

However, there are complicating and mixed factors to consider. While inflation for durable goods has abated, inflation rooted in other core areas such as housing and services has proven non-transitory in nature and more stubborn than most central banks anticipated.  

The US Federal Reserve raised its inflation forecast and decreased forecasted rate cuts from three to one. The Fed’s continually shifting outlook on inflation and against the backdrop of an expected economic slowdown will likely continue to dominate headlines.  

Other contradictory factors affecting the US economy include decelerating real wage growth, 4.1% unemployment (low by historical standards), net declining inflation, and the weakening of forward-looking measures of consumer and small business confidence.  

US elections in the fourth quarter are likely to play a major role for both equities and fixed income in the second half of 2024 as the markets try to anticipate which administration will have to address sunsetting tax provisions and an expanding deficit driven by interest repayment growth needed to sustain both decreased taxes receipts and increased spending over the last decade.  

All this seems to be setting up for a scenario of weak but positive economic growth and continued higher for longer interest rates environment. 

NCCF investment performance: Investment results continued the positive momentum from the previous quarter. Most NCCF managers posted low single-digit gains for the quarter and on a rolling one-year basis range from 11-15%. The NCCF Investment Fund trailed the Broad 70/30 benchmark for the rolling one-year measure, returning 11.8% and 14.2% respectively. On the quarter, the NCCF Investment Fund returned 0.7%. 

More market commentary is available from NCCF’s investment advisor, Graystone Morgan Stanley. For investment information specific to your fund, please contact your Donor Engagement Officer or email support@nccommunityfoundation.org.  

	1-Year	3-Years	5-Years	10-Years	15-Years
All Managers (Net Weighted)	13.4%	2.5%	7.5%	6.4%	8.5%
NCCF Investment Fund	11.8%	1.8%	7.0%	5.8%	7.7%
Benchmark – Broad	14.2%	3.0%	7.6%	6.5%	8.2%
Benchmark – Blended	13.0%	3.0%	7.9%	7.3%	9.4%
Benchmark – Broad: This benchmark is a general approach to investment. 70% of the MSCI All Country World Equity Index and 30% of the Bloomberg Barclays Aggregate Bond Index.
Benchmark – Blended: This benchmark takes a more diversified approach to investment. 35% R1000, 15% Russell Midcap, 5% R2000, 10% MSCI EAFE Net, 30% Barclays Govt/Credit Bond, 5% FTSE Treasury Bill 3 Month.

Notes: Multi-year percentages are annualized. Returns are net of investment fees.