The following market commentary provides context for the investment performance of your charitable assets.

From Cambridge Associates, investment advisor

Global equities (2.9% for the MSCI All Country World Index) advanced in the second quarter, with performance led by tech-heavy markets, including the United States and emerging Asia. The global monetary policy outlook was clouded by stickier-than-expected inflation, leading investors to temper their outlook for rate cuts this year. Global investment-grade bonds (-1.1% for the Bloomberg Global Aggregate Bond Index) declined as yields pushed higher, driven by shifting policy expectations, increasing bond supply, and heightened political risks.

US equities (3.9% for the MSCI US Index) outperformed developed markets (DM) ex US (-0.6% for the MSCI World ex US Index) as returns were exceptionally concentrated amid ongoing artificial intelligence (AI) enthusiasm. The equal-weighted US equity index declined 2.8% in the second quarter, underperforming the cap-weighted measure by the second widest margin on record. Mega-cap tech stocks—namely Nvidia—were the primary drivers of both the second quarter return and first quarter EPS growth. Growth and large caps gained, contrasting the declines for value and small caps.

Performance among major DM ex US equity regions was mixed. The United Kingdom (3.7%) was supported by an economic growth rebound, cooling inflation, and a more dovish outlook from the Bank of England. Pacific ex Japan (2.5%) outperformed, boosted by strong gains from Singapore, even as central banks in Australia and New Zealand telegraphed a more hawkish turn. Europe ex UK (-0.4%) declined as political risks offset tailwinds from central bank rate cuts and economic momentum.

Emerging markets (EM) equities (5.0% for the MSCI Emerging Markets Index) outgained DM (2.6% for the MSCI World Index) peers, boosted by strong returns from Asia (7.4%); Taiwan (15.1%), India (10.2%), and China (7.1%) posted top gains within the region. Still, the Chinese equity rally began to lose steam in May as data showed ongoing weakness in the broader economy and real estate sector. Taiwan was supported by the AI theme and strong export data.

US fixed income (0.1% for the Bloomberg US Aggregate Bond Index) was flat as markets digested several crosscurrents. Ten-year US Treasury yields initially surged 50 basis points (bps) through late April after unexpectedly hot inflation and economic data. Yields ultimately closed the quarter 16 bps higher, ending at 4.36%, after signs that the economy and inflation had cooled. Still, both the Federal Reserve outlook and market pricing suggest fewer rate cuts this year than expected at the start of the second quarter. Increased supply and signs of weak investor demand for Treasuries also put upward pressure on yields. High-yield (1.1%) corporates outperformed investment-grade (-0.1%) peers, TIPS (0.8%) topped nominal Treasuries (0.1%), and municipal bonds (0.0%) were unchanged.