STEADY AS SHE GOES!!
So far, 2022 has been one of the most volatile and perplexing stock markets that we have seen in some time.
We make investment decisions based on fundamental economic expectations and results. In early 2022, we argued that the economy was in pretty good shape, and while metrics were softening, we did not believe that a cataclysmic collapse, whispered by some Wall Street professionals, was the most likely outcome. Rather, we prepared for a choppy stock market. We lowered our stock exposure, repositioned our equity portfolio to lessen our exposure to technology and increase our exposure to value stocks, lowered international equity exposure, and shortened the maturity of our bond portfolio.
Apparently, the rest of the investment community disagreed with our economic outlook, and the June quarter was awful for us. We were down 16%, which translated to a YTD decline of 20.97% and pushed our YTD ranking down to the 91st percentile, a level that we are unaccustomed to. While our long-term ranking and performance remained very good, and we were consistently in the top third of our competitive universe, short-term performance was not.
In July, in response to evolving market conditions, we made some changes in our portfolio composition.
As a result, our 3rd quarter performance showed a lot of improvement. While that quarter’s negative return of 3.41% didn’t meet our long-term expectations, it was still much better than that of our benchmark, which was down 4.59%. This stronger relative performance moved our rank up to the top 11% for the quarter and our YTD ranking up to the 71st percentile, quite a jump from the 91st percentile YTD ranking at the end of June.
October continued the improvement, and now we’ve had positive returns of 5.41% for the month. This is better than that of our benchmark, which was 4.50%, and it places us in the top 16% of comparable funds for the quarter and in the top 50% YTD.
Although we focus more on long-term results, it is hard to ignore very poor short-term results; we know that extended poor short-term performance produces poor long-term performance, and we work hard to make course corrections as needed. We are currently in a much better spot than in June, but we remain cautious and continue to closely monitor both the Fund and the market.
With the investors, parishes and their missions firmly in mind, we are gratified that we were able to recognize a problem as it developed and took prudent action that modified our portfolio and improved our position. We will continue to keep both short- and long-term performance and Fund value at the fore as we navigate these turbulent times.
If you would like us to address your parish or organization is person, please don’t hesitate to call or to send an email through our website: www.eastonepiscopalfund.org. If would like to be notified of updates, please let us know, and we will add you to our notification email list.
W. Christopher Maxwell, Vice Chair
Board of Managers, Easton Episcopal Funds