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Second Quarter 2015 Equity Market Review

During the second quarter of 2015, global equity markets registered mixed results as investors weighed the positive indications of an improving U.S. economy against uncertainty over Fed policy relating to the timing of potential interest rate hikes, slowing growth in China and the deteriorating situation in Greece. In the United States, the S&P 500® Index advanced in the months of April and May but declined in June, resulting in an overall second quarter return of 0.28%, which brought the YTD return to 1.23%. The broader U.S. market, as measured by the Russell 3000® Index, gained 0.14% for the quarter and 1.94% for the YTD period.

From a sector perspective, performance was mixed as only three of the nine sectors within the Russell 3000® Index advanced during the second quarter. Performance returns were varied as the top- and bottom-performing sectors were separated by over 6.5%. The best performance came from the health care, financial services and consumer discretionary sectors, while the weakest performance was experienced within the utilities, producer durables and energy sectors.

Companies with higher beta and lower P/E characteristics generally outperformed during the quarter. In terms of equity market capitalization, small-cap companies slightly outperformed their large-cap counterparts as the Russell 2000® Index posted a second quarter return of 0.42%, while the Russell 1000® Index advanced 0.11%. Style differentiation was evident in the quarter as growth-oriented stocks outperformed value-oriented stocks across all market capitalization segments. In the large capitalization segment, the Russell 1000® Growth Index and Russell 1000® Value Index had quarterly returns of 0.12% and 0.11%, respectively. In the small capitalization segment, the Russell 2000® Growth Index posted a second quarter return of 1.98%, while the Russell 2000® Value Index declined -1.20%.

Outside of the United States, developed non-U.S. markets outperformed their U.S. counterparts during the quarter. Small capitalization stocks generally outperformed large capitalization stocks and growth styles outperformed value styles. The MSCI-EAFE Index (Net), a measure of international developed country returns, posted a second quarter return of 0.62%, bringing the YTD return to 5.52%. From a country perspective, Ireland, Norway and Austria in the European region were among the best performers, while Japan and Hong Kong also performed well. New Zealand, Australia and Germany were among the weakest-performing countries during the period. From a sector perspective, six of the 10 groups generated positive results during the period. The best performance came from the telecommunications, energy and utilities sectors, while the weakest performance was experienced within the health care, materials and technology sectors.

Emerging markets slightly outperformed developed markets during the quarter as the MSCI Emerging Markets Index (Net) posted a quarterly return of 0.69%, bringing the year-to-date performance to 2.95%. From a country perspective, Hungary, UAE, Russia and China were among the best performers, while Indonesia, Malaysia, Egypt and the Philippines were among the weakest performers for the quarter. Six of 10 sectors posted positive results during the period. The energy and financials sectors were the strongest performers, while the health care and technology sectors were the weakest performers for the quarter.


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S&P 500® is a trademark of The McGraw-Hill Companies and has been licensed for use by GuideStone Funds. The Equity Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the Equity Index Fund.

All indices are unmanaged and not available for direct investment. Index performance assumes no taxes, transaction costs, fees or expenses. This update is prepared for general information only and it is not to be reproduced.

GuideStone Capital Management, a controlled affiliate of GuideStone Financial Resources, serves as the investment adviser to GuideStone Funds.