DIT INVESTMENT OPTION NOW AVAILABLE - DIOCESAN FOSSIL FUEL FREE FUND

     Q2-2022 DIT NEWSLETTER - Q2-2022 PARTICIPANT NEWSLETTER

     Q1-2022 DETAILED PERFORMANCE INFORMATION - Q1-2022 DIT PERFORMANCE

 
  

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CELEBRATING 200 YEARS OF PRUDENT INVESTING

 

DIT PERFORMANCE (As of June 30, 2022) DIT performance as of June 30, 2022, a second quarter 2022 commentary, and a 2021 Annual Report by the TOD's President appear below.

                 
 

Average Annual Returns

  2nd Qtr  

    YTD

    1-yr

   3-yr

  5-yr

 7-yr

 10-yr

  DIT Total Fund (Combined)  -11.5% -15.6% -12.6% 4.8% 5.4% 5.3%    7.2%
  DIT Total Fund (Trusts)  -11.8% -15.8% -12.7% 5.2% 5.7% 5.5%    7.6%
  42% Russell 3000/23% MSCI EAFE(net)/35% Blbg Barc Agg  -12.1%  -17.0%  -13.3% 4.3% 5.5% 5.7%    7.2%
  65% MSCI ACWI/35% Blbg Barc Agg  -11.9%  -16.8%  -13.7% 4.0% 5.1% 5.3%    6.4%
                 
  Average Annual Returns   2nd Qtr  

    YTD

    1-yr

   3-yr

  5-yr

 7-yr   10-yr
 

DIT Stock Fund

-14.9% -18.4% -14.2%  6.5%

  6.9%

7.0%   10.0%
 

65% Russell 3000/35% MSCI EAFE (Net)

-15.9% -20.6% -15.2%  6.7%

  7.7%

7.7%   10.1%
 

MSCI AC World Index (Net)

-15.7% -20.2% -15.8%  6.2%

7.0%

 7.0%     8.8%
                 

 

Average Annual Returns   2nd Qtr  

    YTD

    1-yr

   3-yr

  5-yr

 7-yr   10-yr
 

DIT Income Fund

 -5.7%  -10.8%   -10.4%   0.6%  2.0%  1.9%    2.2%
  Blbg Barc U.S. Aggregate  -4.7% -10.3%   -10.3%   -0.9%  0.9%  1.4%    1.5%
                 
  Average Annual Returns   2nd Qtr  

    YTD

    1-yr

   3-yr

  5-yr

   
 

Diocesan Fossil Fuel Free Fund

  -16.3%  -21.1%  -14.5% 8.6% 9.4%    
 

85% Russell 3000 / 15% MSCI EAFE

  -16.4%  -20.9% -14.4% 8.5% 9.3%    
           

                 

Management Fees per Annum

       
 

Income Fund

 

  0.35%

           
 

Stock Fund

 

  0.72%

         
 

Diocesan Fossil Fuel Free Fund

 

  0.47%

         
 

Performance information is provided separately on a quarterly basis by Prime, Buchholz & Associates and People's United Bank based on security valuations furnished by BoNY Mellon. The average annual returns reflect changes in unit values and assume the automatic reinvestment of dividends. The returns are before management fees.

              

2021 Annual Report

Second Quarter 2022 Commentary

Dear DIT Participant:              

      Domestic equity markets experienced steep declines in the second quarter. The Russell 3000 Index, an indicator of the broad market, tumbled 16.7%, bringing year-to-date losses to 21.1%, officially in bear market territory. The sharp sell-off was driven by high, broad-based inflation and investor expectations of slowing economic growth as the Fed raised rates to combat rising inflation expectations. Fear is growing that Fed rate hikes may push the U.S. economy into a recession. Value stocks continued to outpace their growth counterparts, as higher rates weighed more heavily on future earnings of growth stocks; the Russell 3000 Value Index declined 12.4% versus a 20.8% downturn for the Russell 3000 Growth Index. In a risk-off environment, large caps modestly outpaced small caps; the Russell 1000 Index declined 16.7% versus 17.2% for the Russell 2000 Index. All 11 GICS sectors finished the quarter in negative territory, with growth-oriented sectors leading the declines. Consumer discretionary (-25.7%) was the worst performing sector. IT (-21.3%) and communications services (-21.0%) stocks followed closely behind. At the other end of the spectrum, defensive consumer staples (-5.0%) and utilities (-5.2%) sectors held up relatively well. Energy (-6.0%) stocks also continued to outperform, buoyed by high oil and gas prices.

     Developed non-U.S. equities also fell sharply in the second quarter with the MSCI EAFE Index sinking 14.5% in USD terms. Market weakness continued to be more extreme in Europe, where Russia's war with Ukraine intensified during the period. The MSCI Euro ex-UK Index was down 15.7%, while MSCI Japan decreased 14.6%. MSCI Asia ex-Japan dropped 14.1%, and MSCI UK declined 10.5%. Consistent with U.S. equities, value remained ahead of growth for the second consecutive quarter. The MSCI EAFE Value Index contracted 12.4%, while the MSCI EAFE Growth Index fell 16.9% Energy (-4.1%) was the best performing sector, while IT had the worst quarter, finishing down 23.5%. 

      Continuing to combat high inflation, the Federal Open Market Committee hiked rates by 50 bps in May and by another 75 bps in June. The final estimate of first quarter GDP was a 1.6% decline, following a 6.9% gain in the fourth quarter. Early second quarter GDP estimates signal a 1.2% decrease. Treasury yields increased over the quarter, along with a slight steepening of the yield curve. Credit spreads widened, with investment grade spreads increasing 39 bps to 155 bps and high yield widening 244 bps to 569 bps. Amid this backdrop, the Bloomberg U.S. Aggregate Index declined 4.7%, while the Bloomberg U.S. Corporate High Yield Index fell 9.8%.

     The DIT Total Fund (Trusts) declined 11.8% in the second quarter, outperforming the blended index* by 30 bps.

        The DIT Stock Fund lost 14.9% during the quarter, but outpaced the blended 65% Russell 3000/ 35% MSCI EAFE Index by 100 bps due to outperformance from all three active international managers and overweight exposure to domestic large and small cap value stocks. The DIT Income Fund finished the quarter 100 bps behind the Bloomberg U.S. Aggregate Index as the IR&M Core Bond SRI account and the Loomis Sayles Core Plus SRI Fund underperformed the benchmark by 30 bps and 90 bps, respectively. The allocation to high yield bonds also detracted. The DIT Fossil Fuel Free Stock Fund declined 16.3%, 10 bps ahead of the blended 85% Russell 3000/15% MSCI EAFE Index. With all economic sectors losing ground in the period, Aperio's modest cash allocation contributed to the outperformance.

    With increased geopolitical risk in Europe due to Russia's war with Ukraine and equity markets shifting in favor of value stocks over growth stocks, the Trustees moved $3.5 million from non-U.S. growth manager, Hardman Johnston International Equity, to U.S. value manager, Dodge & Cox, as the second quarter began. In May, the Trustees made another asset allocation decision, moving $5.0 million from the Vanguard High-Yield Corporate Fund to the IR&M Intermediate Fund, in a risk mitigation effort.

   It seems investors might expect to experience volatility in all markets for the foreseeable future. That said, we believe the longer-term return from a disciplined investment management approach focused on manager selection, asset allocation and periodic rebalancing will ultimately produce better returns relative to market benchmarks and our spending rule imperatives.

    The fee for combined management, consulting, custody, and accounting services for DIT Stock Fund investments is 72 basis points annually, the fee for DIT Income Fund Investments is 35 basis points annually, and the fee for DIT Fossil Fuel Free Stock Fund Investments is 47 basis points annually. There are no additional or underlying fees on your DIT Investments.

     The Trustees currently recommend a 65% Stock Fund / 35% Income Fund allocation for investments in the DIT. We respectfully remind DIT participants that they can delegate to us responsibility for maintaining the allocation of their agency funds or, if preferred, specify an allocation where their agency funds will be automatically restored on a quarterly basis. We would also encourage DIT participants who have not already done so to review their current agency fund allocations.


      
As always, we welcome invitations from EDOM parishes and affiliated organizations to discuss existing or prospective investments in the DIT. A meeting with TOD representatives can be arranged by calling the DIT's Investment Coordinator, Mr. Charles Jordan, at (617) 482-4826 ext. 557 or by emailing him at cjordan@diomass.org.
     

*    42% Russell 3000/23% MSCI EAFE/35% Blbg. Barc. Agg