Investment Commentary: Q4 2022

Although equity markets finished the year with a strong rally (the S&P 500 was up 7.6% in the 4th quarter), markets still suffered one of their worst outcomes in decades in 2022. Despite the strong 4th quarter, the S&P finished the year down -18.1% — the worst outcome in 14 years. Other indices like the Russell 3000 and Nasdaq fared even worse, finishing the year down -19.2% and -19.4%, respectively.

Driving much of the market movements throughout the 2022 was the volatile and higher interest rate environment, as the market tried to price inflation and position for a wide range of economic uncertainties. The Federal Reserve remains steadfast in the need for higher rates to fight inflation, which has peaked in the near-term and retreated significantly from its recent highs, and the market has already begun to price in rate cuts later in 2023. Geopolitical pressures remain high especially as it pertains to Russia, although recently China has begun to distance themselves more vocally.

The Community Foundation’s Corporation return for fiscal year of 2022 was 60 basis points better than the market benchmark (-12.6% against -13.2% for the benchmark) while the generic traditional 60/40 asset allocation model was down -16.0%, its worst performance in nearly a century and only surpassed on two occasions, both of which occurred in the 1930s. While 2022 was a very tumultuous year, the Corporation’s Commingled Fund remained well-positioned and diversified in a variety of asset classes, strategies, and geographies.

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.