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August 9, 2022
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Investing involves risk, including the potential loss of principal.
Before investing, carefully consider the fund’s investment objectives, risks, charges, and expenses of the investment company. This and other important information can be found in the fund’s prospectus. To obtain a copy, visit TIMOTHYPLAN.COM or call 800.846.7526. Read each prospectus carefully before investing.
Because the Timothy Plan Funds do not invest in excluded securities, the Funds may be riskier than other funds that invest in a broader array of securities. There are risks when a fund limits its investments to particular sized companies, and all companies are subject to market risk. The Fund recently experienced significant negative short-term performance due to market volatility associated with the Covid-19 pandemic.
MUTUAL FUND INVESTOR
To read more about our mutual funds, please click this link to access fund information, including the prospectus, fact sheets, performance, and holdings for each fund.A prospectus is available from the Fund or your financial professional that contains more complete, important information. Please read it carefully before investing. Mutual Funds distributed by Timothy Partners, Ltd. Member FINRA.
HEADQUARTERS: 1055 Maitland Center Commons, Maitland, FL
(800) 846-7526 | Send an email | View our mapMUTUAL FUND SHAREHOLDER SERVICES: c/o Ultimus Fund Solutions, Post Office Box 541150, Omaha, NE 68154-1150
(800) 662-0201 | Account AccessETF INVESTOR
To read more about our ETFs, please click this link to access fund information, including fact sheets, performance and holdings for each fund. A prospectus is available from the Fund or your financial professional that contains more complete, important information. Please read it carefully before investing. ETFs distributed by Foreside Fund Services, LLC, Member FINRA. Timothy Partners, Ltd. is not affiliated with Foreside Fund Services, LLC.
ETF SHAREHOLDER SERVICES: Contact your financial advisor for information regarding your account.
Market Backdrop
Global equity markets went on a wild ride in the second quarter with equities rising in April, taking a plunge in May and then rebounding strongly in June to end the quarter on a strong footing. Hopes of accommodative central bank action early in the quarter led to equities continuing their first quarter rally but was interrupted abruptly by a falling out of the U.S.-China trade talks. An announcement that the U.S. would be ending talks and increasing tariffs on $200bn sent the markets on a tailspin as the goldilocks market environment was questioned.
Central banks around the world appeared to double down on their commitment for further monetary easing and markets began to price in rate cuts in 2019, a major change versus earlier in the year where rate hike expectations had been delayed but not expectations for rate cuts. The “central bank put” is back with the Federal Reserve, European Central Bank, Swiss Bank, and the Bank of Japan all appearing to sound the same trumpet of “whatever it takes” mentality to support economic growth and confidence over the coming year. Excess central bank liquidity has helped financial assets since the Global Financial Crisis and central banks appear to be turning on the taps once more. Global bond yields plummeted during the quarter hurting the Financials sector but helping support growth equities. Recessionary concerns continued to surface as the 3m-10y U.S. bond yield spread remained in negative territory and the New York Fed Probability of U.S. Recession measure reached over 29%, the highest reading since 2007.
In spite of rising tensions in the Middle East, oil prices fell during the quarter as increasing production from the U.S. Permian Basin combined with higher than expected global inventories and concerns over demand given weakening economic outlook led oil prices lower from their April highs. The U.S. Dollar softened a bit given increasing expectations for rate declines in the U.S. but remained elevated versus most currencies.
Large caps outperformed small and mid-caps for the quarter and year while Growth has significantly outperformed Value for the quarter and year-to-date periods. The best performing MSCI EAFE countries for the quarter were Switzerland, Australia, and Germany while the worst performing MSCI EAFE countries for the quarter were Israel, Finland, and Austria. The best performing emerging markets for the quarter were Argentina, Russia, and Greece while the worst for the quarter were Pakistan, Chile, and Hungary.
Performance and Attribution
The Timothy Plan International Fund continued its strong start of 2019 as it outperformed the MSCI EAFE index for the second quarter in a row. Sector allocation and stock selection were both additive to alpha this quarter. In sector allocation, an underweight to Real Estate and an overweight to Technology were positive. Stock selection was helped by strong selection in Industrials, Financials, and Consumer Staples. From a country standpoint, the Fund benefitted from strong stock selection in the UK, Japan, and Hong Kong.
Outlook
With subdued inflation across most developed economies, major central banks appear set to begin ultra-loose monetary policy experiment 2.0. The added monetary stimulus should continue to support financial assets in the near term although economic conditions have worsened in major markets placing doubts about the viability of an extended economic recovery. International equities continue to provide a good investment opportunity at these valuation levels.