Global equity markets rallied in the third quarter leading to some all-time highs. U.S. small cap stocks and emerging markets led the rally. Earning growth and Federal Reserve resumed interest rate cutting propelled U.S. market higher. International markets continued strong performance, with international developed stocks (MSCI EAFE Index) up +4.77% for the quarter, and emerging market equities (MSCI EM Index) up +10.64% for the quarter.
Fixed-income returns were positive during the quarter led by emerging market debt and high yield bonds. The U.S. 10-year Treasury yield fluctuated during the quarter beginning at 4.26% and ending at 4.16%. Performance for the Barclays Government Credit Index, a proxy for the broad U.S. fixed-income market, was up +1.91% in the quarter; high-yield bonds were up +2.54% in the quarter; and emerging market debt was up +3.78% in the quarter.
The Stable Value Fund continues to be a positive performer, with returns up +0.61% for the quarter.
The Bond Fund was up +1.58% for the quarter leaning toward emerging market debt.
The Sustainable Balanced Fund, which has allocations to both sustainability-focused equity and fixed-income managers, was up +5.13% for the quarter.
The Target Annuitization Date (TAD) Funds, which have allocations to the Bond Fund as well as to the Equity Fund (and in a few of the TAD Funds, the Stable Value Fund), had performance between +1.86% and +5.00% for the quarter.
The Equity Fund was up +5.92% for the quarter, with broad market participation.
The Global Sustainability Index Fund (GSIF) was strong, with a return of +7.16% for the quarter.
The Basic Annuity essentially has been protected from interest rate volatilities since 2016. As a result, the funded status (assets to the present value of all future promises to annuitants) remains healthy. There was a 2% increase in benefit payouts beginning in 2025.
In the Participating Annuity, the funded status improved during the quarter. There was a 6.5% increase beginning in 2025. It is positioned well for another increase in 2026.
What should you do?
As a retirement investor, you should focus always on the appropriate asset allocation, or mix among stocks, bonds, and cash/stable value investments, and your long-term retirement objectives. It is rarely wise to react to shorter-term market movements. The easiest way to avoid that is to invest in the Target Annuitization (TAD) Fund nearest to your retirement date. These funds are more focused on growth early in your career, and become more conservative as retirement approaches, by owning fewer equities and more bonds and stable value investments.
Our responsive Member Services staff is available to assist you. Please contact the Pension Boards at 1.800.642.6543 with questions about fund information, performance, strategy, and approach.
As a benefit of your PBUCC Lifetime Retirement Income Plan, Fidelity Retirement Planners can help you see if you are on track for retirement and help you choose the investments in your account. Calls are unlimited and confidential. Call via Pension Boards Members Services and ask to speak with a Fidelity Retirement Planner at 1.800.642.6543, from 8:00 a.m. to 9:00 p.m., Monday-Friday.