• U.S. negotiations over new fiscal-stimulus terms carried past the end of July despite the expiration of enhanced unemployment insurance benefits and protections from eviction within housing supported by the federal government.
  • We believe that an ebb and flow of assorted concerns in the coming months will continue to spark volatility across financial markets. Such periods of instability are expected in any long-term investing plan; as such, at SEI, we are prepared as always to navigate the current wave of deep uncertainty.

Global equities continued to climb sharply during July as the U.S. dollar’s spot price dropped by more than 4% versus a basket of major currencies during the period, marking its largest one-month decline since September 2010.

Emerging-market shares, led by China and Latin America, handily outperformed those of developed markets for July, while U.S. equities outpaced other major developed markets. The gold futures price rose to an all-time high in U.S. dollars during the month, finishing with a gain of more than 10%. Meanwhile, the West Texas Intermediate oil futures price increased by $1.00 during July, to end the period at $40.27; OPEC+ (the Organization of the Petroleum Exporting Countries, led by Saudi Arabia — plus Russia) announced plans in mid-July to begin relaxing oil-output cuts that had been instituted earlier in 2020 to counteract falling oil prices.

Government-bond rates generally declined across maturities in the U.S., U.K. and eurozone during July. U.S. and eurozone government-bond rates dropped the most in the longest maturities; in the U.K., gilt rates declined most dramatically in the intermediate-to-long-term segment of the yield curve.

At the end of July, President Donald Trump’s administration was still negotiating new fiscal-stimulus terms with the House of Representatives — despite the end-of-July expiration of enhanced unemployment insurance benefits and protections from eviction within housing supported by the federal government. During the month, the U.S. government reached deals with several pharmaceutical companies (one American, three European) to supply a combined 200 million doses of their pending coronavirus vaccines at a total cost of over $4 billion.

The United States–Mexico–Canada Agreement (USMCA) took effect on July 1, officially replacing the North American Free Trade Agreement (NAFTA), while closure of the US-Canada border was extended (with few exceptions) until August 21.

The wide-ranging labor-market support that the UK’s Job Retention Scheme has provided was set to begin receding at the end of July. Effective August, companies are required to begin paying the national insurance and pension contributions for their furloughed workers; companies must also pay 10% of their wages starting in September, and then 20% by October. This expanding burden-sharing raises the possibility that employers will need to permanently lay off workers.

The U.K. Treasury announced a patchwork of programs during July targeted at bolstering dining and tourism in the U.K. Restaurants and pubs, which opened their doors in July for the first time in several months, are expected to benefit from reduced taxes on food and non-alcoholic drink sales (from 20% to 5%); the tax cut also applies to tourist attractions and travel accommodations. Additionally, a 50% dining discount (up to £10 per diner) is set to begin in August. The U.K. also unveiled a work placement program for young adults; it also suspended taxes on some home purchases.

The EU struck a landmark accord to help fund an economic recovery from COVID-19-induced containment measures. The agreement’s €1.8 trillion price tag includes a €750 billion recovery plan (with more than half the figure intended as grants and the balance as loans), as well as funding for EU budgets through 2027. In a first, EU members agreed to partially fund the deal by issuing common EU debt, thereby tightening the fiscal union between member countries.

Tension between the U.S. and China intensified throughout July. In a break from previous U.S. policy that said maritime disputes must be resolved peacefully through UN-backed arbitration, the Trump administration formally denounced China’s territorial claims in the South China Sea as illegitimate. The U.S. also imposed sanctions in response to human rights abuses against Muslim Uighurs and ethnic Kazakhs in the Xinjiang region; China issued retaliatory sanctions against U.S. senators who criticized the abuses. The U.S. gave China 72 hours in late July to close its consulate in Houston, Texas, claiming that Chinese diplomats helped steal U.S. medical research on COVID-19; China followed through on its vow to retaliate, closing the U.S. consulate in Chengdu.

The U.K. suspended its extradition treaty with Hong Kong in early July to protest China’s new security law for Hong Kong; it also banned using technology that belongs to Chinese telecommunication company Huawei for Britain’s high-speed wireless network. At the end of July, Hong Kong postponed elections for the territory’s legislature until next year, citing a resurgence of COVID-19 cases; this prompted protests from democratic groups.

At least 68 countries and territories postponed elections between February 21 and July 26, also citing concerns about COVID-19 containment, according to the Wall Street Journal; at least 49 countries and territories committed to holding their elections as scheduled. The U.S. general election is almost certainly going to proceed in early November, as is set by federal law; any delay would require approval by both chambers of the Congress, and one has publically confirmed it would reject any postponement.

Major Index Performance in July 2020 (Percent Return)

Major Index Performance in July 2020 (Percent Return)

Sources: FactSet, Lipper

Economic Data

  • U.S. manufacturing activity expanded at a modest rate during July; new orders accelerated, while employment continued to contract. Services sector activity essentially maintained pace during the month, according to an early report, after moving lower in June. New U.S. jobless claims bottomed in mid-July at 1.3 million per week before increasing through the end of the month. The U.S. economy shrank at a 32.9% annualized rate during the second quarter, its sharpest decline on record since 1947.
  • Solid growth returned to the UK’s services sector, according to an early July report, while manufacturing continued to rebound at a steady and moderate pace. Mortgage approvals re-accelerated to about 40,010 in June after bottoming at approximately 9,270 in May; associated lending jumped from about £290 million to approximately £1.22 billion in the same period. The latest available information on U.K. gross domestic product (GDP) showed a contraction of 19.1% from March to May 2020.
  • The recovery in eurozone manufacturing remained subdued in July, while services activity accelerated, according to a preliminary report. Across the euro area, the unemployment rate increased by 7.8% in June, from 7.7% in May. The first reading of second-quarter GDP for the eurozone showed a contraction of 12.1%, its largest quarterly drop on record. Germany’s economy shrank by 10% for the second quarter, while Italy, France and Spain contracted by 12.4%, 13.8% and 18.5%, respectively; Lithuania’s 5.1% second-quarter decline was the mildest in the eurozone.

Central Banks

  • The Federal Open Market Committee made no monetary-policy changes following its late-July meeting, but reiterated its commitment to using its full range of programs to help support current economic challenges. During July, the Federal Reserve (Fed) Board of Governors announced extensions of temporary U.S. dollar-liquidity-swap and repurchase-agreement facilities with other central banks through March 2021.
  • The Bank of England’s Monetary Policy Committee did not hold a meeting during July. Following its mid-June meeting, the central bank announced that it would expand its stock of asset purchases (from an initial £200 billion increase announced in March) by another £100 billion to £745 billion.
  • The European Central Bank (ECB) held its benchmark interest rates firm after a mid-July monetary policy meeting, and emphasized the demand for and utility of its asset-purchase and lending programs.
  • The Bank of Japan (BOJ) made no changes following its mid-July monetary policy meeting, maintaining its short-term rate and its target rate for the 10-year Japanese government bond.

Fixed-Income Performance in July 2020 (Percent Return)

Fixed-Income Performance in July 2020 (Percent Return)

Sources: FactSet, Lipper. See “Corresponding Indexes for Fixed-Income Performance Exhibit” in the Index Descriptions section for more information.

Regional Equity Performance in July 2020 (Percent Return)

Regional Equity Performance in July 2020 (Percent Return)

Sources: FactSet, Lipper. See “Corresponding Indexes for Regional Equity Performance Exhibit” in the Index Descriptions section for more information

Portfolio Review

The risk-on rally was reinvigorated during July. Large-cap U.S. stocks were one of the best performers among developed markets; our U.S. large-cap strategies1 produced substantial absolute returns for the month, but lagged their benchmarks. At a high level, a tilt toward value-oriented stocks and away from mega caps were the chief detractors. Our U.S. small-cap strategies performed quite well, outpacing the strong returns of their benchmarks primarily due to selection in financials, health care and information technology. Overseas, our international developed-market equity strategy modestly outperformed its benchmark during July. Overall positioning within information technology (including an overweight), along with selection in industrials and materials, were the top sector-level contributors, while an underweight to utilities and selection in financials were the top detractors. Regionally, allocations to Taiwan and South Korea were the greatest contributors, followed by an overweight to Norway, while selection in the U.K. and an underweight to Sweden were the greatest detractors. Our emerging-market equity strategy delivered a huge positive absolute monthly return, but nevertheless modestly lagged its benchmark. An overweight to information technology was the top contributor, despite being partially offset by selection in the sector, while selection within industrials and health care also contributed. Selection in consumer discretionary was the largest sector-level detractor; selection also detracted within financials and real estate, but was partially offset by underweights to both sectors. Regionally, overall positioning in Taiwan (including a modest overweight) was the top contributor, while positioning in China (including a large underweight) was the greatest detractor.

Our cored fixed-income strategy outperformed its benchmark during July as most non-government fixed-income sectors led comparable U.S. Treasurys. The strategy benefitted from its primary yield-curve positioning—an overweight to the long end—which contributed as long-term yields declined. An overweight to corporate bonds—concentrated in industrials and financials—also contributed. Across securitized sectors, an allocation to non-agency mortgage-backed securities (MBS) was positive; an overweight to asset-backed securities (ABS) contributed (particularly our largest allocation to student loans, which performed well); commercial MBS performance was held back by our higher-quality bias as lower-quality tranches outperformed for the first time in five months; and agency MBS was slightly negative, but selection in specific mortgage pools was modestly positive. Our high-yield strategy produced solid absolute returns in July, but slightly trailed its benchmark. An allocation to collateralized loan obligations (CLOs) was the top detractor, followed by selection in leisure and media. Underweights and selection in telecommunications and real estate were the greatest contributors, followed by selection in technology and electronics. Our emerging-market debt strategy modestly outpaced its blended benchmark’s strong performance during the month. Foreign-currency- and local-currency-denominated debt both performed well as a majority of emerging-market currencies strengthened versus the U.S. dollar. Overweights to Mexico and Angola contributed as they continued to rebound, while overweights to Argentina and Ecuador—which we held due to their prices relative to expected recovery values—also contributed. Underweights to higher-quality countries like Poland, the Philippines, and Peru detracted.

Manager Positioning and Opportunities

Within U.S. small caps, we continued to favor value-oriented stocks due to their extraordinarily inexpensive valuations both relative to history and compared to growth-oriented stocks.

The entire economic rebound is essentially dependent on how governments respond to COVID-19 public health and economic crises. Financial markets have been reflecting positive developments ranging from massive stimulus, a potential future vaccine, and a belief that the worst is over, but it is not yet clear whether the trough of the recession has been reached. We expect volatility in markets to remain elevated and dependent on a successful reopening of the economy. Ultimately, reactivation of a “business as usual” economy will depend on the success of containing the disease, as well as the severity of a potential second outbreak. Within our U.S. large-cap strategies, we continued to underweight some of the largest-capitalization stocks in favor of more attractively valued opportunities further down the capitalization spectrum. We also remained overweight to health care, consumer staples and financials on the combination of profit expectations and reasonable valuations. Within U.S. small caps, we continued to favor value-oriented stocks due to their extraordinarily inexpensive valuations both relative to history and compared to growth-oriented stocks. We also continued to favor the stability alpha source because of our cautious market view and stretched valuations. Our international developed-market and emerging-market equity strategies have lowered their momentum exposure and increased value sensitivity. Both strategies were still overweight information technology and industrials due to the strong growth opportunities they offer. Our developed-market strategy was underweight defensive sectors like utilities, consumer staples and real estate where growth opportunities appear limited. Within our emerging-market equity strategy, we were underweight financials and real estate — largely as a result of our limited exposure to China — and communication services due to elevated valuations.

Global Equity Sector Performance in July 2020 (Percent Return)

Global Equity Sector Performance in July 2020 (Percent Return)

Sources: FactSet, Lipper. MSCI ACWI Index Components (as defined by SEI).

Even if a sustainable economic recovery gets under way, investors seem to be ignoring the possibility that it may be a long time before most companies achieve previous levels of profitability.

With long-term yields remaining near historically low levels, our core fixed-income strategy has been gradually reducing its overweight to the 25-to-30 year segment of the yield curve, while positioning within the 7-to-10 year segment has been increased. We’ve grown our overweight to corporates — concentrated within financials and industrials, although the latter has begun to shrink, as well as a small overweight to energy pipelines. More exposure to corporates has come at the expense of our overweight to agency MBS, although we’ve maintained an allocation to non-agency MBS. Overweights to ABS and CMBS remained given their competitive risk-adjusted yields, and we continued to emphasize higher-quality holdings. Overall, we have been pursuing gradual changes to portfolio positioning and a “follow the Fed” strategy. Given the support that the corporate credit market has been receiving from the Fed, our overweight may drift a bit lower to keep the strategy’s risk profile in line with its target. Our high-yield strategy’s largest position remained an allocation to CLOs, followed by overweights to media and insurance. The largest underweights were within telecommunications, consumer goods and automotive. Our emerging-market debt strategy remained overweight to local-currency assets, and it was underweight higher-quality countries in favor of higher-yielding names that stand to generate strong returns in a recovery as they have started from more attractively priced positions. Top country overweights were Mexico, Ukraine, and Egypt, while top underweights were Philippines, Poland, and Thailand.

SEI’s View

Despite mounting infections, hospitalizations and deaths from the pandemic — as well as the unprecedented stoppage of global economic activity — stock markets around the world have managed to mount a resounding comeback.

Our working assumption is that there will likely be another significant wave of infections going into the fall-to-winter flu season. The question is, how disruptive will it be to the global economy?

Even if a sustainable economic recovery gets under way, investors seem to be ignoring the possibility that it may be a long time before most companies achieve previous levels of profitability. The after-tax profit margins of U.S. domestic businesses were already on a declining trend before the onset of the virus and shelter-in-place orders.

Margins around the globe will likely remain well below their previous peaks as long as COVID-19 is a severe health threat. Most businesses, to one degree or another, are expected to endure lower sales, higher costs and a decline in productivity. There also will probably be a deadweight loss for industries needing extra inventory on hand in order to guard against future shortages and supply-chain disruptions caused by periodic flare-ups of the virus. “Just-in-time” inventory management will turn into “just-in-case” inventory management, tying up cash. Supply chains will likely be diversified over time, a process that was already under way as a result of the trade war between China and the U.S.

The extraordinary March-to-April lockdown in the U.S. necessitated fiscal measures unparalleled in both scope and speed of implementation. The result has been a tsunami of red ink. As of April 2020, the Congressional Budget Office projected the deficit will reach nearly 18% of U.S. GDP in 2020, and improve to only 10% of U.S. GDP in 2021. U.S. debt relative to GDP is forecast to rise to 108% by the end of fiscal year 2021 versus 79% at the end of fiscal year 2019.

These are unsettling numbers. Many investors may wonder whether such a surge in government debt will provoke an economic crisis even after the pandemic runs its course. We don’t think that it will. The U.S. has a large, dynamic economy and deep capital markets.

The policies pursued by the Federal Reserve have also served to keep interest rates low. Its balance sheet has ballooned this year, far exceeding the increases logged by the ECB or the BOJ.

The U.S. certainly is not alone in engaging in a huge fiscal response that is then monetized by the central bank. In our opinion, governments are treating the fight against COVID-19 like they would a war. As many resources as possible are being thrown into the fight, supported by debt issuance that is absorbed primarily by the central banks.

Those who remember the 1970s are understandably worried by the inflationary potential of such extraordinary debt monetization. If it does lead to inflation, it probably won’t be any time soon, in our opinion. Given our view that the economy will remain below full utilization of labor or productive capacity for the next few years, we believe inflation is unlikely to break out of the 0%-to-3% range of much of the past decade.

Investors do not seem too concerned about the speed of Europe’s economic recovery or the impact of the health crisis on countries’ fiscal positions. The bond yields of the most economically-fragile European countries remain close to those of German bund yields, although spreads have widened from pre-pandemic levels. The ECB has been quite successful in short-circuiting the liquidity crisis and flight-to-safety that threatened the euro area’s financial structure.

The COVID-19 crisis has pushed Brexit concerns off the front pages. As the December 31 transition deadline nears, it could become an economic factor nearly as important as a second wave of the virus. The U.K. and EU should probably reach a deal on their trading relationship by at least October 31 to allow time for countries to approve the treaty into law before the end of 2020. Any free-trade agreement would require the U.K. to agree to permanently align its rules and regulations to those of the EU on an array of matters. The U.K. would essentially bear much of the EU membership cost without having a voice at the table that sets the rules. It is becoming increasingly likely that there either will be a modest agreement that includes tariffs, or (in the worst-case scenario) a no-deal result that falls back on the World Trade Organization’s most-favored-nation rules.

While many factors determine equity performance, it has correlated in the emerging-market space with the extent of economic disruption caused by the virus. Asian and central European countries have pulled back the most on their mandates to restrict movement and social interaction. Latin America and India have eased some of those constraints, but not nearly as much as the other two regions. We continue to keep close tabs on China, as it was the first to lock down and first to unlock activity. We expect recovery patterns elsewhere in the world to follow that of China.

Central banks in the emerging world are also doing their part to help restore their economies. Interest rates have come down in almost every country in recent months, to record-low levels in many cases. In addition, a long list of emerging-country central banks — including those with shakier reputations, such as South Africa and Turkey — are either buying or planning to buy their government’s debt. We think this debt-monetization may lead to an inflation problem in the future.

It’s been said many times that bull markets climb a wall of worry. Maybe now they must learn to swim through waves of worry that include:

  • The possibility of a second wave of COVID-19 infections (or, arguably, a continuation of the first wave in some countries) forcing another round of extensive lockdowns and shelter-in-place orders that could lead to a double-dip recession
  • A possible breakdown of political consensus regarding the way forward as economies struggle to regain strength
  • The likelihood that economic recovery will take at least a year, and likely longer — and that few economies are apt to rebound fully to pre-pandemic levels, even if most countries manage to avoid a disruptive second wave of the virus
  • Expectations that companies will face higher costs and increased inefficiencies; taxes will almost certainly rise across many economies in the years ahead; and bankruptcies and defaults will climb as government aid programs end

We believe that an ebb and flow of assorted concerns in the coming months will continue to spark volatility across financial markets. Such periods of instability are expected in any long-term investing plan; as such, we are prepared as always at SEI to navigate the current wave of deep uncertainty.

1 Individual holdings will differ between strategies. Not representative of our passive strategies.

Glossary of Financial Terms

  • Alpha source: Alpha source is a term used by SEI as part of our internal classification system to categorize and evaluate investment managers in order to build diversified fund portfolios. An alpha source is the investment approach taken by an active investment manager in an effort to generate excess returns. Another way to define an alpha source is that it is the inefficiency that an active investment manager seeks to exploit in an effort to generate excess returns.
  • 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.
  • 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.

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 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 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 14 developed-market countries in Europe (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and Switzerland). The Index covers approximately 85% of the free float-adjusted market capitalization across European developed markets excluding the U.K.
  • 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.
  • MSCI USA Index is designed to measure the performance of the large- and mid-cap segments of the U.S. market.
  • The MSCI World Index is a free float-adjusted market-capitalization-weighted index 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 U.S.
  • 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 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 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 is a market-capitalization-weighted index that consists of 500 publicly-traded large U.S. companies that are considered representative of the broad U.S. 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.

Corresponding Indexes for Fixed-Income Performance Exhibit

U.S. High Yield - ICE BofA U.S. High Yield Constrained Index

Global Sovereigns - Bloomberg Barclays Global Treasury Index

Global Non-Government - Bloomberg Barclays Global Aggregate ex-Treasury Index

Emerging Markets (Local) - JPMorgan GBI-EM Global Diversified Index

Emerging Markets (External) - JPMorgan EMBI Global Diversified Index

U.S. Mortgage-Backed Securities (MBS) - Bloomberg Barclays US Mortgage Backed Securities Index

U.S. Asset-Backed Securities (ABS) - Bloomberg Barclays US Asset Backed Securities Index

U.S. Treasurys - Bloomberg Barclays US Treasury Index

U.S. Treasury Inflation-Protected Securities (TIPS) - Bloomberg Barclays 1-10 Year US TIPS Index

U.S. Investment-Grade Corporates - Bloomberg Barclays US Corporate Bond Index

Corresponding Indexes for Regional Equity Performance Exhibit

United States - S&P 500 Index

United Kingdom - FTSE All-Share Index

Pacific ex Japan - MSCI Pacific ex Japan Index (Net)

Japan - TOPIX, also known as the Tokyo Stock Price Index

Europe ex U.K. - MSCI Europe ex UK Index (Net)

EM Latin America - MSCI Emerging Markets Latin America Index (Net)

Legal Note


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 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).