Clearly, the outbreak of COVID-19 is the major story of the first quarter. In conditions like these, we encourage investors to stay diversified and avoid short-term trading. If you are a goals-based investor — and your portfolio is aligned with your goals, time horizon and risk tolerance — be patient. Time should be on your side.
Q1 2020 QIR
I'm Kevin Barr, Head of SEI's Investment Management Unit. Over the next few minutes I will provide an overview of the global financial markets and our perspective on them. Clearly, the outbreak of COVID-19 is the major story of the first quarter.
The S&P 500 Index experienced a waterfall decline as its spread took a heavy toll on financial markets. The bull market ended with record-setting declines. Globally, stocks fared no better, as the performance of the MSCI ACWI Index shows. A deeper look at conditions in different corners of the market can help provide a reminder that the headlines often miss the full story.
U.S. sector-level performance spanned a huge range, from information technology with comparably modest losses to energy anchoring the low end far beyond financials, the second-worst performer. This pattern generally held with global equities, with the notable exception that healthcare outperformed information technology.
The divergent performance across sectors both in the U.S. and elsewhere around the globe encapsulates the importance of taking a diversified approach to investing. Fixed income markets faced their own unique challenges. While high-quality bonds were in little danger of default, investors looking to raise cash engaged in indiscriminate selling. This temporarily drove prices down, creating an imbalance in the market. Treasurys performed quite well, while high-yield and emerging-market debt experienced equity-like losses.
In conditions like these, we encourage investors to stay diversified and avoid short-term trading. If you are a goals-based investor—and your portfolio is aligned with your goals, time horizon and risk tolerance—be patient. Time should be on your side.
If your portfolio was not aligned with your goals as the selloff began, we think it’s too late to sell now. Doing so may mean you’ll risk missing the rebound that will eventually take place.
While we know that there are difficult days ahead, we encourage everyone to remain patient. This too shall pass. In the meantime, stay safe.
On behalf of everyone at SEI, thank you, as always for your trust and confidence.
For a glossary of investing terms, and index definitions, visit our Global Indexes and Investing Terminology page.
There are risks involved with investing, including loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Bonds will lose value as interest rates rise. Diversification may not protect against market loss.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only.
Index returns are for illustrative purposes only and do not represent actual investment performance. Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI).