The Trustees of Donations to the Protestant Episcopal Church (TOD) is a non-profit, Episcopal corporation founded in 1810 to receive and manage funds for the benefit of the Bishop and the Episcopal Diocese of Massachusetts (EDOM). In 1939, the TOD established the Diocesan Investment Trust (DIT) to offer EDOM parishes and affiliated organizations a dedicated investment vehicle for their endowments.
The DIT Total Fund, comprised of the Stock and Income Funds, gained 4.5% (gross)* in the third quarter, underperforming the index** by 100 bps. The DIT Income Fund (+2.4%) beat the Bloomberg U.S. Aggregate Index (+2.0%) by 40 bps. However, the DIT Stock Fund (+5.7%) underperformed the 80% S&P 500/20% MSCI EAFE Index (+7.5%) by 180 bps.
Domestic equity markets continued their strong performance in the third quarter. The S&P 500 Index gained 8.1%, while the broader Russell 3000 Index was up 8.2%. Markets were lifted by investor optimism about Artificial Intelligence, expected interest rate cuts, and solid corporate earnings.Small cap stocks outperformed large cap stocks, with the Russell 2000 Index gaining 12.4% versus 8.0% for the Russell 1000 Index. Growth stocks continued to outperform value stocks, with the Russell 3000 Growth Index returning 10.4% versus 5.6% for Russell 3000 Value Index.IT ...
Read MoreThe DIT Total Fund, comprised of the Stock and Income Funds, gained 4.5% (gross)* in the third quarter, underperforming the index** by 100 bps. The DIT Income Fund (+2.4%) beat the Bloomberg U.S. Aggregate Index (+2.0%) by 40 bps. However, the DIT Stock Fund (+5.7%) underperformed the 80% S&P 500/20% MSCI EAFE Index (+7.5%) by 180 bps.
Domestic equity markets continued their strong performance in the third quarter. The S&P 500 Index gained 8.1%, while the broader Russell 3000 Index was up 8.2%. Markets were lifted by investor optimism about Artificial Intelligence, expected interest rate cuts, and solid corporate earnings.Small cap stocks outperformed large cap stocks, with the Russell 2000 Index gaining 12.4% versus 8.0% for the Russell 1000 Index. Growth stocks continued to outperform value stocks, with the Russell 3000 Growth Index returning 10.4% versus 5.6% for Russell 3000 Value Index.IT (+13.1%) and communications services (+11.8%) sectors, seen as AI beneficiaries, posted double-digit gains.Conversely, defensive sectors, consumer staples (-2.5%) and real estate (+3.5%), were significant laggards.
The developed non-U.S. equity rally stalled in July on renewed global trade tensions. Fears quickly faded and the MSCI EAFE Index closed the quarter up 4.8%. Banks (+12.6%) and aerospace/defense (+10.9%) continued to drive market returns and are now up 52.8% and 92.0%, respectively, year-to-date. From a regional perspective, Spain (+13.0%), Netherlands (+9.7%), Austria (+9.1%), and Hong Kong (+9.1%) were the top performing countries, while Demark (-13.0%), Germany (-1.1%), and New Zealand (-0.1%) lost ground during the quarter. International small cap stocks outperformed the broad market, with the MSCI EAFE Small Cap Index gaining 6.2%. International value continued to outperform international growth stocks. The MSCI EAFE Value Index (+7.4%) outperformed the MSCI EAFE Growth Index (+2.2%).
The Federal Open Markets Committee (FOMC) met twice during the third quarter, in July and in September.The FOMC held rates steady at the July meeting and reduced rates by 25 bps in September. Two additional rate cuts are expected in 2025. The Treasury yield curve underwent a bullish steepening whereby yields at the front end of the curve fell by a greater margin than yields at the long-end of the curve.Duration, however, was rewarded with the Bloomberg Long Treasury Index gaining 2.5% and outperforming the Bloomberg U.S. Treasury 5-10 Year and 1-3 Year Indexes, which gained 1.6% and 1.1%, respectively. Credit spreads also narrowed during the quarter with the investment grade corporate spread declining 9 bps, from 83 to 74, and the high yield corporate spread dropping 23 bps, from 290 to 267.In total, the Bloomberg US Aggregate Bond Index rose 2.0% during the period.High yield bonds continued to outperform the broad market as the Bloomberg High Yield Index gained 2.5% in the third quarter.
The DIT Stock Fund (+5.7%) underperformed the 80% S&P 500 /20% MSCI EAFE Index (+7.5%) in the third quarter. International equity (+7.0%) outperformed the MSCI EAFE index (+4.8%) by 220 bps due to the Avantis International Small Cap Value Fund (+12.0%) and the Vanguard FTSE Developed Markets ETF (+5.6%) beating the benchmark. The MFS International Equity Fund (+1.6%) was the only laggard. Domestic
Domestic equity (+5.2%) underperformed the S&P 500 Index (+8.1%) by 290 bps. The Westfield Large Cap Growth account (+7.2%) had the best return and was followed by the Vanguard Mid Cap Index Fund (+5.3%), the John W. Bristol Equity account (+4.9%), the Wasatch Small Cap Value Fund (+4.9%), and Dodge & Cox Stock Fund (+3.1%). The DIT Investment Committee is actively monitoring the Stock Fund and anticipates making portfolio adjustments in Q4 2025, in light of Q3 2025 underperformance.
During the third quarter, the DIT Income Fund (+2.4%) outperformed the Bloomberg U.S. Aggregate Index (+2.0%) by 40 bps as all three managers outperformed the broad market benchmark. The BrandywineGLOBAL – High Yield Fund (+2.7%) had the best return as high yield outperformed in the period. The Loomis Sayles Core Plus SRI Fund and the IR&M Core Plus Bond SRI account gained 2.4% and 2.3%, respectively.
The passively managed DIT Fossil Fuel Free Stock Fund (+7.9%) outperformed the blended 85% Russell 3000/15% MSCI EAFE Index (+7.7%) by 20 bps. Aperio’s lack of exposure to fossil fuels helped relative results, as the energy sector (+6.3%) was the median performer in the Russell 3000 Index and Aperio partially offset that underweight with modest overweights to utilities (+8.1%) and materials (+7.1%).
At the July month-end, the TOD Investment Committee rebalanced Trust accounts back to the target 65% Stock Fund / 35% Income Fund. Agency Accounts which have designated rebalancing authority to the TOD Investment Committee, were also rebalanced. The following redemptions were made: $1.9M from John W. Bristol, $3.8M from Vanguard FTSE Developed Markets ETF, $3.8M from Avantis International Small Cap Value fund, $0.6M from Aperio Fossil Fuel Free Equity. Proceeds from the rebalancing decision, $10.3M, were invested in the Loomis Sayles Core Plus SRI Fund.
The fee for combined management, consulting, custody, and accounting services for DIT Stock Fund investments is 72 basis points annually, the fee for DIT Income Fund Investments is 35 basis points annually, and the fee for DIT Fossil Fuel Free Stock Fund Investments is 47 basis points annually. There are no additional or underlying fees on your DIT investments.
The Trustees currently recommend a 65% Stock Fund/35% Income Fund allocation for investments in the DIT. We respectfully remind DIT participants that they can delegate to us responsibility for maintaining the allocation of their agency funds or, if preferred, specify an allocation where their agency funds will be automatically restored on a quarterly basis. We would also encourage DIT participants who have not already done so to review their current agency fund allocations.
As always, we welcome invitations from parishes and affiliated organizations to discuss existing or prospective investments in the DIT. A meeting with TOD representatives can be arranged by contacting the DIT’s Investment Coordinator, Bill Boyce, at 617-482-4826, x557, or bboyce@diomass.org.
*gross of custody fees, consulting fees, administrative fees, and investment
management fees for separately managed accounts and commingled vehicles, but
net of mutual fund and ETF investment management fees
**52% S&P 500/13% MSCI EAFE/35% Blbg U.S. Agg
Diocesan Investment Trust (DIT) performance as of September 30, 2025, a third quarter 2025 commentary, and the 2024 Annual Report by the TOD's President appear below.
|
AVERAGE RETURNS* |
3RD QTR |
YTD |
1YR |
3YR |
5YR |
7YR |
10YR |
|---|---|---|---|---|---|---|---|
|
DIT Total Fund (Combined Agency & Trusts) |
4.4% |
12.2% |
10.9% |
16.1% |
9.3% |
8.3% |
8.4% |
|
DIT Total Fund (Trusts) ** |
4.5% |
12.6% |
11.4% |
16.7% |
9.8% |
8.7% |
8.8% |
|
Policy Index *** |
5.5% |
13.2% |
11.0% |
16.5% |
8.9% |
8.5% |
8.7% |
September 30, 2025
|
AVERAGE ANNUAL RETURNS* |
3RD QTR |
YTD |
1YR |
3YR |
5YR |
7YR |
10YR |
|---|---|---|---|---|---|---|---|
|
DIT Stock Fund |
5.7% |
15.4% |
15.3% |
22.8% |
14.3% |
11.1% |
11.7% |
|
DIT Stock Fund Policy Index**** |
7.5% |
16.9% |
15.5% |
23.0% |
14.0% |
11.6% |
12.2% |
September 30, 2025
|
AVERAGE ANNUAL RETURNS* |
3RD QTR |
YTD |
1YR |
3YR |
5YR |
7YR |
10YR |
|---|---|---|---|---|---|---|---|
|
DIT Income Fund |
2.4% |
6.9% |
3.8% |
6.0% |
1.0% |
3.3% |
2.7% |
|
Blbg U.S. Aggregate |
2.0% |
6.1% |
2.9% |
4.9% |
-0.4% |
2.1% |
1.8% |
September 30, 2025
|
AVERAGE ANNUAL RETURNS* |
3RD QTR |
YTD |
1YR |
3YR |
5YR |
7YR |
10YR |
|---|---|---|---|---|---|---|---|
|
Diocesan Fossil Fuel Free Fund |
7.9% |
16.2% |
17.5% |
23.9% |
14.7% |
12.8% |
N/A |
|
85% Russell 3000 / 15% MSCI EAFE |
7.7% |
16.0% |
17.2% |
23.8% |
15.1% |
12.8% |
N/A |
September 30, 2025
*Performance is gross of custody fees, consulting fees, administrative fees, and investment management fees for separately managed accounts and commingled vehicles, but net of mutual fund and ETF investment management fees. Total returns reflect the change in unit values and assume automatic reinvestment of dividends.
**Represents returns for Trust Funds, with the Stock Fund/Income Fund asset allocation directed by TOD Investment Committee. Performance is a weighted return calculated using monthly beginning asset allocation and DIT Stock and Income Fund returns.
***Policy Index is currently 52% S&P 500/13% MSCI EAFE/35% Blbg U.S. Agg. From August 2020 through December 2024, it was 42% Russell 3000/23% MSCI EAFE (net)/35% Blbg U.S. Agg. Prior to August 2020 it was 65% MSCI ACWI (net)/35% Blbg U.S. Agg.
****DIT Stock Fund Policy Index is currently 80% S&P 500 / 20% MSCI EAFE (net). From August 2020 through December 2024, it was 65% Russell 3000/35% MSCI EAFE (net). Prior to August 2020, it was the MSCI ACWI (net).
Performance information is provided separately on a quarterly basis by Prime, Buchholz & Associates and Wilmington Trust based on security valuations furnished by M&T Bank. The average annual returns reflect changes in unit values and assume the automatic reinvestment of dividends. The returns are before management fees.
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For questions, please reach out to bboyce@diomass.org.
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