Full Report: GWII Quarterly Report September 2022
Market commentary
At the start of the quarter, relatively solid Q2 earnings combined with falling energy prices drove investors’ optimism that inflation had peaked—perhaps appeasing the Fed and providing some evidence of a soft landing. The prevailing sentiment moved equity markets higher from July to mid-August for a short-lived bear market rally. However, markets quickly reversed course following the Fed’s Jackson Hole summit, committing the central bank to bring inflation down to 2.0% at the cost of a recession and a higher-than-expected August inflation print of 8.3%. In response, the Fed raised the federal funds rate by 75 basis points to 3.25% in September to combat rising prices. Despite the Fed’s attempts, consumer prices rose 8.2% from the previous year in September. Excluding food and energy, the core Consumer Price Index rose 0.6% to 6.6%, the highest yearly increase since August 1982. The Russia/Ukraine War, China’s Zero COVID policies, United Kingdom’s economic woes, and a potential European energy crisis all continued to fuel investor pessimism. Consequently, the S&P 500 fell 4.9% in the quarter, bringing the year-to-date decline to 23.9%. The Consumer Discretionary (+3.9%) and Energy (+1.7%) sectors remained positive, while the remaining nine fell into negative territory, of which Real Estate (-11.0%) and Communication Services (-11.6%) were the greatest laggards.
For the quarter ended September 30, 2022 the GWII’s Student Investment Funds in aggregate outperformed the benchmark with a return of -4.5% vs. -4.9% for the S&P 500, while also slightly outperforming the benchmark in the calendar year-to-date -23.5% vs. -23.9% for the S&P 500.
Trevor Haen, Teaching Assistant, GW Real Estate Student Investment Fund