Investment Commentary: Q1 2023

During the first quarter of 2023, many of the same headlines and issues experienced over the past year continued to dominate the markets. Inflation, the Federal Reserve, and geopolitics all remained hot-button issues. After a relatively sanguine start to the first two months of the year, the aphorism “gradually then suddenly” seemed to define much of March, as markets returned to the volatility that punctuated 2022. Over the course of a five-day period, Silicon Valley Bank, Signature Bank and Silvergate Bank all collapsed, as problems from losses on underlying loan portfolios and other assets caused market panic. Though the Federal Reserve and other intermediaries acted quickly to stem the potential contagion, when the dust settled, the fall of Silicon Valley Bank and Signature Bank were the second and third largest bank failures in the history of the United States, smaller only than the collapse of Washington Mutual that occurred during the Great Financial Crisis.

Despite the bank failures and heightened volatility, the markets notched a strong overall performance. The S&P 500 finished up 7.5% for the quarter, yet the market had historically thin leadership as many of the largest and most knocked-about names of 2022 had outsized rebounds — Nvidia climbed 90.1%; Meta (Facebook) added 76.1%; and Tesla finished up 68.4%. Underemployment converting to unemployment, commercial real estate troubles and higher overall prices are all affecting the economy.

The Community Foundation’s Corporation returned 5.8% net in the first quarter of 2023, 1.2% ahead of the market benchmark, which was up 4.6%. The Corporation’s results placed it in the top decile of the InvestMetrics Endowment and Foundation database for the year-to-date and one-year ended periods, and in the second decile for the three years ended in March, 2023. The Commingled Fund managed by the Corporation remains allocated to a diversified set of asset classes, strategies and geographies for a long-term approach to endowment management under a variety of different economic scenarios.

Questions? Contact A.F. Drew Alden
SVP and Chief Investment Officer, The Community Foundation for Greater New Haven;
President and CEO, TCF Mission Investments Company

*The Corporation is a Connecticut registered investment adviser and part of The Community Foundation for Greater New Haven.