- President Joe Biden’s administration announced in mid-April that all adults in the U.S. are eligible for vaccination; by the end of the month, about 30% of the U.S. population was fully vaccinated.
- Emerging-market countries will likely lag developed nations in reopening their economies due to vaccination-distribution challenges; but they are expected to benefit from the upswing in developed-market consumer demand.
Capital markets posted strong performance across asset classes in April. Once again, equities raced ahead around most of the world, with developed markets leading emerging markets. U.S. stocks were the top-performing major market, followed by Europe, the U.K., Hong Kong, and then mainland China. Japanese shares declined for the month.
Government-bond rates underwent varying changes across different regions during April. U.S. Treasury rates were mixed across short-term maturities, while intermediate- and long-term rates fell, creating a flatter yield curve. In the U.K., rates moved higher for gilts with maturities of less than 13 years and lower for gilts of more than 13 years—resulting in a flatter curve. Eurozone government-bond rates increased across all maturities; long-term rates rose by more than short-term rates, leading to a steeper curve.
The pause in interest-rate increases during April was beneficial to bonds and the broader fixed-income universe, which generally delivered positive returns. Commodities also continued to increase in price during April, with the Bloomberg Commodity Index advancing by 6.92% and West Texas Intermediate crude oil rising by 7.47% to $63.58 per barrel.
The U.S. began April in the midst of a mild increase in new COVID-19 cases, but returned to the March low by the middle of the month. President Joe Biden’s administration announced in mid-April that all adults in the U.S. are eligible for vaccination; by the end of the month, about 30% of the U.S. population was fully vaccinated. A temporary halt in the use of Johnson & Johnson’s one-dose vaccine (due to concerns about a serious potential side effect) was resolved before the end of April. Globally, more than 1.1 billion doses of COVID-19 vaccine were administered by the end of April.
COVID-19 infection rates dropped in Europe during April to less than 150,000 per day from more than 200,000 per day in the prior month. However, progress was uneven across countries. For example, the seven-day moving average of new cases in Germany at the end of April was 29% below its all-time peak—while France reported a 60% reduction and the U.K. infection rate plunged by 96% to its lowest level since last August. At the same time, more than 20% of the U.K. population was fully vaccinated by the end of April compared to 10% of the French population and 8% of the German population.
Non-essential retail businesses reopened in England on April 12 in keeping with the second stage of the country’s four-part reopening plan. Restaurants and pubs were still limited to outdoor seating, but they were no longer bound to curfews. The next stage—set for May 17, pending continued progress on lower infection rates—will allow restaurants and pubs to provide indoor service and multiple households to congregate inside.
Asia continued to struggle with a severe outbreak centered in India that began in March; it expanded drastically in April, accounting for the overwhelming majority of new global cases, which reached an all-time high of 15.5 million, dwarfing the previous peak of 3.9 million. This outbreak initially spread to other countries in the region, but appeared to crest in India by late April.
President Biden unveiled a set of spending proposals in late April during a joint address to the Congress that would total about $4 trillion, but which would be funded mostly by tax increases. The proposed plans are split into two groups: The American Jobs Plan, which focuses primarily on infrastructure, would cost $2.3 trillion and be funded by an increase in corporate taxes; and The American Families Plan, which focuses on child care, education, healthcare and a range of other issues, would cost $1.8 trillion and be funded by higher taxes for top earners.
- U.S. manufacturing activity continued to expand at or near multi-decade highs according to multiple purchasing managers’ index (PMI) surveys. Services growth accelerated from an already strong pace, reaching the highest rate since the 2009 inception of the IHS Markit U.S. services PMI survey. Jobless claims fell in late April below 500,000 per week—a sharp improvement from an early-month reading of 742,000, and the lowest level since early March 2020. Overall U.S. economic growth jumped to a 6.4% annualized rate during the first quarter of 2021 from 4.3% in the prior quarter.
- U.K. manufacturing activity accelerated further into high-growth territory during April—reaching a 321-month high according to IHS Markit/CIPS—building on a recovery that unfolded throughout most of the first quarter after a brief pause around Brexit at the beginning of 2021. U.K. services growth accelerated in April to its highest rate of expansion in 80 months. The U.K. claimant count (which calculates the number of people claiming Jobseeker’s Allowance) remained at 7.3% in March as the total number of claimants increased from 2.66 million to 2.67 million. The broad U.K. economy expanded by 0.4% in February after contracting by 2.9% in January.
- Eurozone manufacturing growth continued at a red-hot pace during April, reaching the highest level since the 1997 inception of IHS Markit’s eurozone manufacturing PMI survey. Meanwhile, eurozone services activity improved modestly in April, moving from a mild contraction to a mild expansion. The eurozone unemployment rate fell from 8.2% to 8.1% in March despite consensus expectations for an increase. Overall eurozone economic activity contracted by 0.6% during the first quarter of 2021 and by 1.8% year over year, compared to contractions of 0.7% and 4.9%, respectively, in the prior quarter.
- The Federal Open Market Committee (FOMC) made no significant policy changes following its late-April meeting: the federal-funds rate remained near zero and asset purchases were set to continue at a level of $80 billion in U.S. Treasurys and $40 billion in agency mortgage-backed securities per month. Federal Reserve (Fed) Chair Jerome Powell squashed questions about tapering the central bank’s extraordinary support, noting that “we’re 8.5 million jobs below where we were in February of 2020” and are therefore far from the Fed’s mandate to support full employment.
- The Bank of England’s (BOE) Monetary Policy Committee (MPC) did not hold a meeting during April. In its March meeting, the MPC maintained the bank rate at 0.1% and retained an £895 billion maximum allowance for asset purchases; it does not intend to increase rates “at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably.”
- The European Central Bank (ECB) held course at its late-April monetary policy meeting, increasing the pace of asset purchases under its €1.85 trillion Pandemic Emergency Purchase Programme (PEPP). This move, previously announced in March, is intended to counter the negative economic impact of rising rates. Like Powell, ECB President Christine Lagarde expressed that any decisions about winding down PEPP would be data-dependent, and that it would be premature to do so today given the current economic environment.
- The Bank of Japan (BOJ) made no immediate changes to its monetary policy at its late-April meeting after announcing a shift in March from programmatic market interventions to a more as-needed approach. The BOJ shared the possibility that its emergency pandemic-related programs could be extended past their scheduled September 2021 end dates if economic conditions warrant.
U.S. equities continued to deliver very strong performance during April, although large-cap stocks outpaced small caps in a shift from the first quarter. Our U.S. large-cap strategies1 generated elevated absolute returns compared to historical large-cap performance, but they trailed their benchmarks for the month. Exposure to the financials sector was beneficial, but an underweight to communications services and overall value orientation detracted as growth regained leadership from value in April (although the value-growth performance differential was much narrower within small caps than large caps). Our U.S. small-cap strategies outpaced their benchmarks during the month. Selection in consumer discretionary, industrials and financials were the top contributors, while an underweight to real estate detracted. Overseas, our international developed-market equity strategy performed in line with its benchmark during April. Strong returns for momentum- and stability-oriented holdings offset weak performance from value-oriented holdings. Our emerging-market equity strategy underperformed its benchmark in a challenging environment for stock selection.
Our core fixed-income strategy outpaced its benchmark in April as non-government fixed-income sectors modestly outperformed comparable U.S. Treasurys. An overweight to the long end of the yield curve contributed with the decline in long-term yields. An overweight to corporate bonds was a modest contributor due to its concentration in financials. Exposure to mortgage-backed securities (MBS)—including an off-benchmark allocation to non-agency MBS and an overweight to agency MBS—contributed. An overweight to asset-backed securities (ABS) also contributed, particularly our largest allocation to student loans. A higher-quality bias within commercial MBS (CMBS) detracted as lower-quality tranches outperformed, but selection within higher-quality tranches was strong, and an underweight to taxable municipals detracted. Our high-yield strategy outperformed its benchmark during April. An allocation to collateralized loan obligations (CLOs) was the top contributor, followed by selection in energy and healthcare. Selection in real estate, financial services, and utilities were the top detractors. Our emerging-market debt (EMD) strategy outpaced its blended benchmark in April while EMD was the best-performing area of the fixed-income universe. A majority of positive performance was generated by exposure to emerging-market currencies that strengthened versus the U.S. dollar. Underweights to higher-quality names in favor of higher-yielding positions were the main detractors.
Manager Positioning and Opportunities
The U.S. economy has begun to ramp back up to full speed and expectations point toward higher than historical average growth in the near term. Our U.S. large-cap strategies continued to underweight some of the largest capitalization stocks in favor of more attractively valued opportunities further down the capitalization spectrum. In sector terms, we were overweight healthcare, consumer staples and financials on the combination of profitability and reasonable valuations. Our U.S. small-cap strategies were still predominantly oriented towards value. Momentum has begun to build in value names—first quarter earnings revisions were strongest among the cheapest companies to an unprecedented degree—consequently, we have allowed momentum exposure to increase closer to market neutral. We remained positively oriented toward profitability, and we are hopeful about reaching an inflection point in favor of profitable versus non-earning companies. Overseas, our international developed-market equity strategy remained overweight sectors with strong growth potential, such as information technology and consumer discretionary, and underweight defensive sectors like financials and real estate. Our emerging-market equity strategy had elevated exposure to value- and momentum-oriented stocks. From a sector perspective, we were overweight information technology due to underappreciated growth opportunities in semiconductors and 5G. We were also overweight materials given renewed demand for metals, while we were underweight healthcare and communication services.
With long-term yields rising but still near historically low levels, our core fixed-income strategy has been gradually adjusting its yield curve posture—reducing an overweight to the 25-to-30 year segment of the yield curve and increasing exposure in the 5-to-7 year segment. We added to an overweight in corporate financials during April after heavy bank issuance came to market at attractive levels. Overweights to ABS and CMBS remained given their competitive risk-adjusted yields, and our holdings have been centered in higher-quality tranches. We also maintained an allocation to non-agency MBS, and we have been relying on agency MBS as a high-quality alternative to Treasurys, which would otherwise be the main beneficiary of our gradually shrinking overweight to corporates. Our U.S. high-yield strategy’s top position remained an allocation to CLOs. Basic industry had the most significant overweight, while telecommunications, capital goods, and consumer goods were the largest underweights. Our emerging-market debt strategy retained an overweight to local-currency assets. Our top country overweights were Mexico, South Korea and Malaysia, while top underweights were Thailand, China and Indonesia.
The war against COVID-19 is not over, but the path to victory has become clearer. Investors are anticipating the return to a more normal world. This was reflected in the rapid rise in bond yields during the first quarter, the most important change in the financial environment so far this year. This jump caused outsized price drops in long-term fixed-income securities and helped fuel the sharp equity-market rotation away from expensively priced growth shares and into value-oriented and cyclical sectors, both in the US and internationally.
With the passage of the latest U.S. fiscal stimulus package, the cumulative amount of U.S. fiscal support since March 2020 totals a remarkable $6 trillion—approaching 30% of U.S. GDP. The Fed has gone to great lengths to protect the bond market from the rising tide of Treasury issuance with its purchases of outstanding issues. In the 12 months ended March 2021, the Fed bought $2.3 trillion of Treasury securities; as of February, the federal deficit over the prior 12 months amounted to $3.55 trillion.
Higher bond yields may cause bouts of indigestion for equities but should not derail the bull market. We expect cyclical and value-oriented shares to continue to advance relative to growth and defensively oriented sectors. In most cycles, value shares outperform growth when the yield curve is rising or is especially wide (rates on long-term Treasury bonds are well above those on short-term securities). Value’s performance against growth bottomed on September 1, and then drove higher straight through the first quarter.
While value-oriented shares had been making a comeback against growth in the U.S. up until March, other countries’ equity markets had been making a comeback against the U.S.
As spring arrives and lockdowns end in the U.K. on the back of successful vaccination efforts, we expect the country to experience a strong recovery in consumer demand and business activity that outpaces the rest of Europe.
U.K. government policy remains supportive in the near-term. But the recently proposed fiscal budget appears rather restrained compared to measures taken by the Biden administration, adding only about 3% of U.K. GDP to the budget deficit for the 2021-to-2022 fiscal year. From the 2023-to-2024 fiscal year and beyond, policy actions are projected to begin reducing the deficit, mostly through increasing the corporation tax rate from 19% to 25% and through the freezing of income tax thresholds.
Although not as high as the valuation metrics found in the U.S. equity market, shares outside the U.S. still appear expensive. Currently, the MSCI World ex USA Index is priced at almost 17 times the earnings per share forecast for the next 12 months, the highest level since 2004.
To repeat, developed-country equity markets still look cheap compared to U.S. equities. The forward price-to-earnings ratio for the MSCI USA Index is above 23. The MSCI World ex USA Index therefore trades at an unusually wide 27% discount. Although longer-term growth differentials justify a structurally higher multiple for U.S. equities, rebounding economies and rising interest rates should lead to a narrower valuation gap.
The jump in U.S. bond yields this year has raised investor concerns that emerging markets will be the victims of a 2013-style taper tantrum. Rising rates are a headwind, but we believe emerging economies are generally in a better position to withstand the pressure than they were eight years ago. Strong growth in the world economy over the next year should help lift most emerging markets.
World trade volumes, for example, had already reached pre-pandemic levels by the end of last year. Over the course of 2021, the expansion in trade should continue. When trade volumes are strong, developing-country equity markets tend to perform well against those of economically advanced countries.
We believe the economic backdrop strongly supports cyclical and value-oriented equities in the emerging markets, just as it has in developed markets, notwithstanding growth’s outperformance of value in April. The MSCI Emerging Markets Value Index (total return) is highly correlated with industrial commodity prices, which have already vaulted higher from their year-ago lows.
Demand for metals and other commodities should be stoked by strengthening manufacturing and construction activity in the U.S. and China, recovery in Europe and Latin America as vaccines become more widely available, the global push into electric vehicles and other climate projects, and the major infrastructure package that is next on the Biden Administration’s to-do list.
Emerging economies also look less susceptible to a 2013-style taper tantrum because their external positions are much healthier. Current account balances as a percentage of GDP are generally much smaller than they were eight years ago.
Emerging-market local-currency and U.S. dollar bond yields have moved higher in the year to date, but the increase has been modest so far. Option-adjusted spreads are still near their lows of the past three years, certainly not qualifying as a taper tantrum.
Granted, some big countries face continuing problems. Besides Turkey, debt dynamics among the larger countries appear most worrying in Brazil and South Africa. However, most of the debt in these two countries is denominated in local currency, allowing their governments to engage in some form of financial repression (like quantitative easing) in order to temper the pressure on their bond markets.
SEI’s base case is an optimistic one. Developing countries will likely take longer than developed nations to reopen fully due to vaccination-distribution challenges. Yet, even these countries will benefit economically from the upswing in developed-market consumer demand.
Having confidence is not the same as being complacent, however. Beyond COVID-19 concerns, we expect investors will be increasingly focused on the next multi-trillion dollar U.S. spending package, which will include tax increases on corporations and high-income households. Compromises will be needed to keep the Democratic caucus unified.
Generally speaking, the tax and regulatory changes championed by the Biden administration are not considered business- or equity-market friendly. But the same could be said of the economic policies pursued during President Barack Obama’s administration. That did not prevent one of the strongest and most enduring bull-market runs in U.S. history. We caution against making broad asset-allocation changes based on perceived shifts in the political winds.
As for monetary policy, we will be watching whether the Fed can maintain its stance of a near-zero federal-funds rate through 2023. If the acceleration in inflation proves stronger and longer-lasting than investors expect, bond yields could climb appreciably from today’s levels.
If the Fed accelerates policy rate hikes, we would expect a neutral-to-negative reaction in equities and other risk assets. Suppressing the rise in bond yields through even more aggressive policy actions, on the other hand, could lead to a weaker U.S. dollar and a sharper investor focus on inflation-hedging. Equity valuations could get even more expensive than they are now as investors grow even more exuberant. Interesting times, indeed.DOWNLOAD THE FULL COMMENTARY
1Individual holdings will differ between strategies. Not representative of our passive strategies.
Glossary of Financial Terms
Bear market: A bear market refers to a market environment in which prices are generally falling (or are expected to fall) and investor confidence is low.
- Bull market: A bull market refers to a market environment in which prices are generally rising (or are expected to rise) and investor confidence is high.
- Cyclical stocks: Cyclical stocks or sectors are those whose performance is closely tied to the economic environment and business cycle. Managers with a pro-cyclical market view tend to favor stocks that are more sensitive to movements in the broad market and therefore tend to have more volatile performance.
- Fiscal policy: Fiscal policy relates to decisions about government revenues and outlays, like taxation and economic stimulus.
- Fiscal stimulus: Fiscal stimulus refers to government spending intended to provide economic support.
- Forward price-to-earnings (PE) ratio: The forward PE ratio is equal to the market capitalization of a share or index divided by forecasted earnings over the next 12 months. The higher the PE ratio, the more the market is willing to pay for each dollar of annual earnings.
- Hedging: Hedging is an investment technique designed to try to limit potential losses from swings in market value (price changes) of stocks, bonds, commodities or currencies.
- Monetary policy: Monetary policy relates to decisions by central banks to influence the amount of money and credit in the economy by managing the level of benchmark interest rates and the purchase or sale of securities. Central banks typically make policy decisions based on their mandates to target specific levels or ranges for inflation and employment.
- Mortgage-backed securities: Mortgage-backed securities (MBS) are pools of mortgage loans packaged together and sold to the public. They are usually structured in tranches that vary by risk and expected return. Agency means that the debt is guaranteed by a government-sponsored entity.
- Options: Options are contracts that provide a buyer with the right, but not the obligation, to buy or sell a security at an agreed-upon price.
- Pandemic Emergency Purchase Programme (PEPP): PEPP is a temporary asset-purchase programme of private and public sector securities established by the ECB to counter risks to monetary-policy transmission and the outlook for the euro area posed by the COVID-19 outbreak.
- Purchasing managers’ index (PMI) survey: A PMI survey is compiled from responses to questionnaires sent to a panel of purchasing managers working, for example, in the manufacturing and business services sectors.
- Quantitative easing: Quantitative easing refers to expansionary efforts by central banks to help increase the supply of money in the economy.
- Taper tantrum: Taper tantrum describes the 2013 surge in US Treasury yields, resulting from the US Federal Reserve’s announcement of future tapering of its policy of quantitative easing.
- Yield: Yield is a general term for the expected return, in percentage or basis points (one basis point is 0.01%), of a fixed-income investment.
- Yield curve: The yield curve represents differences in yields across a range of maturities of bonds of the same issuer or credit rating (likelihood of default). A steeper yield curve represents a greater difference between the yields. A flatter curve indicates the yields are closer together.
Index and Benchmark Descriptions
All indexes are quoted in gross performance unless otherwise indicated.
- The Bloomberg Barclays 1-10 Year US TIPS Index measures the performance of inflation-protected public obligations of the U.S. Treasury that have a remaining maturity of 1 to 10 years.
- The Bloomberg Barclays US Asset Backed Securities (ABS) Index measures the performance of ABS with the following collateral types: credit and charge card, auto and utility loans. All securities have an average life of at least one year.
- The Bloomberg Barclays Global Aggregate Index is an unmanaged market-capitalization-weighted benchmark, tracks the performance of investment-grade fixed-income securities denominated in 13 currencies. The Index reflects reinvestment of all distributions and changes in market prices.
- The Bloomberg Barclays Global Aggregate ex-Treasury Index is an unmanaged market index representative of the total-return performance of ex-Treasury major world bond markets.
- The Bloomberg Barclays Global Treasury Index is composed of those securities included in the Bloomberg Barclays Global Aggregate Bond Index that are Treasury securities.
- The Bloomberg Barclays US Corporate Bond Index is a broad-based benchmark that measures the investment-grade, fixed-rate, taxable corporate bond market.
- The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index measures the performance of investment-grade, fixed-rate, mortgage-backed, pass-through securities of Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA) and Freddie Mac (FHLMC).
- The Bloomberg Barclays US Treasury Index is an unmanaged index composed of U.S. Treasurys.
- The Bloomberg Commodity Index is composed of futures contracts and reflects the returns on a fully collateralized investment in the Index. This combines the returns of the Index with the returns on cash collateral invested in 13-week (3-month) U.S. Treasury bills.
- The ICE BofA U.S. High Yield Constrained Index contains all securities in The ICE BofA U.S. High Yield Index but caps exposure to individual issuers at 2%.
- The ICE BofA U.S. High Yield Index tracks the performance of below-investment-grade, U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.
- The Chicago Board Options Exchange Volatility Index (VIX) tracks the expected volatility in the S&P 500 Index over the next 30 days. A higher number indicates greater volatility.
- CBOE Volatility Index (VIX Index): The VIX Index tracks the expected volatility in the S&P 500 Index over the next 30 days. A higher number indicates greater volatility.
- The Dow Jones Industrial Average is a widely followed market indicator based on a price-weighted average of 30 blue-chip New York Stock Exchange stocks that are selected by editors of The Wall Street Journal.
- The FTSE All-Share Index represents 98% to 99% of U.K. equity market capitalization. The Index aggregates the FTSE 100, FTSE 250 and FTSE Small Cap Indexes.
- The JPMorgan EMBI Global Diversified Index tracks the performance of external debt instruments (including U.S. dollar-denominated and other external-currency-denominated Brady bonds, loans, eurobonds and local-market instruments) in the emerging markets.
- JPMorgan GBI-EM Global Diversified Index tracks the performance of debt instruments issued in domestic currencies by emerging-market governments.
- The MSCI ACWI Index is a market-capitalization-weighted index composed of over 2,000 companies, representing the market structure of 48 developed- and emerging-market countries in North and South America, Europe, Africa and the Pacific Rim. The Index is calculated with net dividends reinvested in U.S. dollars.
- The MSCI ACWI ex-USA Index includes both developed- and emerging-market countries, excluding the U.S.
- The MSCI Emerging Markets Index is a free float-adjusted market-capitalization-weighted index designed to measure the performance of global emerging-market equities.
- The MSCI Emerging Markets Latin America Index captures large- and mid-cap representation across five emerging-market countries in Latin America.
- The MSCI Emerging Markets Value Index measures the performance of large- and mid-cap stocks exhibiting overall value style characteristics across 27 emerging-market countries.
- The MSCI EMU (European Economic and Monetary Union) Index is a free float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of countries within EMU. The Index consists of the following 10 developed-market country indexes: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal and Spain.
- The MSCI Europe ex-UK Index is a free float-adjusted market-capitalization-weighted index that captures large- and mid-cap representation across developed-market countries in Europe excluding the UK.
- The MSCI Frontier Emerging Markets Index is a free float-adjusted market capitalization index designed to serve as a benchmark covering all countries from the MSCI Frontier Markets Index and the lower size spectrum of the MSCI Emerging Markets Index.
- The MSCI Pacific ex Japan Index captures large- and mid-cap representation across four of five developed-market countries in the Pacific region (excluding Japan).
- The MSCI Japan Index is designed to measure the performance of the large- and mid-capitalization stocks in Japan.
- MSCI United Kingdom Index is designed to measure the performance of the large- and mid-cap segments of the U.K. market.
- The MSCI USA Index measures the performance of the large- and mid-cap segments of the US market. The Index covers approximately 85% of the free float-adjusted market capitalization in the US.
- The MSCI World Index is a free float-adjusted market-capitalization-weighted index that is designed to measure the equity-market performance of developed markets. The Index consists of the following 23 developed-market country indexes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the U.K. and the U.S.
- The MSCI World ex-USA Index is a free float-adjusted market-capitalization-weighted index that is designed to measure the equity-market performance of developed markets, excluding the US.
- The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the National Association of Securities Dealers Automated Quotations (NASDAQ) system.
- Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
- The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 Index companies with higher price-to-value ratios and higher forecasted growth values.
- The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values.
- The Russell 2000 Value Index measures the performance of small-cap value segment of the U.S. equity universe. It includes those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values.
- The Shenzhen Stock Exchange Composite Index tracks performance of A share stocks (which are denominated in renminbi, the local currency) and B share stocks (which are denominated in Hong Kong dollars, an offshore currency) on China’s Shenzhen Stock Exchange.
- The S&P 500 Index Index is an unmanaged market-capitalization-weighted index comprising 500 of the largest publicly traded US companies and is considered representative of the broad US stock market.
- The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The Index is supplemented by the subindexes of the 33 industry sectors. The Index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.
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 regarding SEI’s portfolios or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.
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. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments.
Diversification may not protect against market risk. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.
Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI).