Global equity markets had a very strong quarter, led by emerging markets stocks and followed by U.S. small cap stocks. U.S. markets enjoyed its best quarter since 2020 on prospects of a de-escalation of the war and strong corporate earnings. Large-cap stocks (S&P 500 Index) increased +15.20% in the quarter and +10.21% YTD, and small-cap stocks (Russell 2000 Index) increased +21.49% in the quarter and + 22.57% YTD. International developed stocks (MSCI EAFE Index) increased +10.82% for the quarter and +9.44% YTD, and emerging market equities (MSCI EM Index) increased +24.05% for the quarter and +23.85% YTD.
Fixed-income returns were positive during the quarter. The U.S. 10-year Treasury yield fluctuated during the quarter but ended at 4.44%. Performance for the Bloomberg U.S. Government Credit Index, a proxy for the U.S. fixed income market, increased +0.70% in the quarter and +0.49% YTD; high-yield bonds increased +2.47% in the quarter and +1.96% YTD; and blended emerging market debt increased +4.25% in the quarter and +2.43% YTD.
The Stable Value Fund continues to be a positive performer, with returns up +0.61% for the quarter and +1.33% YTD.
The Bond Fund was up +0.95% for the quarter and +0.39% YTD.
The Equity Fund was up +15.09% for the quarter and +13.17% YTD, outperforming its benchmark.
The Sustainable Balanced Fund, which has allocations to both sustainability-focused equity and fixed-income managers, was up +8.49% for the quarter and +6.14% YTD.
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 +3.53% and +12.90% for the quarter and between +3.51% and +11.13% YTD. We started offering three new TAD funds in 2026.
The World Selection Index Fund (formerly Global Sustainability Index Fund) was up +15.02% for the quarter and +9.76% YTD.
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 1.5% increase in benefit payouts beginning in 2026.
The Participating Annuity invests in all asset classes. The funded status also remains healthy. There was an 8.0% increase in benefit payouts beginning 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.