Q2 2018 Investment Review

July 19, 2018

Slow advance for aging bull market.

US Quarterly Update Q2 2018

Transcript

Read the transcript

Hi,
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.

Equity markets advanced in fits and starts during the second quarter, regaining some lost ground from earlier in the year. The rally stalled as trade war fears rose in the final weeks of June.

The S&P 500 ended the quarter up 3.4%, outpacing global equity markets. By contrast, the MSCI All-Country World Index, a proxy for global equity markets, gained just 0.53% for the quarter. From a sector standpoint, results were mixed. Energy was the top performer, followed by information technology, consumer discretionary, heatlhcare and utilities. Financials posted the largest decline, with telecommunicaton services, industrials and consumer staples also falling.

In this environment, SEI’s equity strategies were hampered by their value tilt. While technology-driven growth stocks continue to hold sway, we believe the fundamental appeal of value stocks is more attractive in the long run for prudent investors.

Fixed-income markets reflected the relatively favorable conditions in the U.S. during the second quarter. U.S. high yield bonds outpaced the rest of the fixed-income universe, followed by U.S. Treasury Inflation Protectd Securities and securitized sectors. Emerging-market debt tumbled, especially bonds denominated in local currencies. The fall can be traced to a rally in the U.S. dollar, growing trade pressures, and rising interest rates increasing borrowing costs in emerging-markets.

Looking ahead, the same risks that marked the second quarter remain front and center. Rising trade tensions and pending interest rate hikes by the Federal Reserve are notable threats to a bull market that is far closer to its end than its beginning.

Despite these challenges, the U.S. economy remains strong, corporate profits continue to grow, and stock valuations outside of the tech sector are reasonable. Accordingly, we believe the bull market should continue to advance, we plan to stay the course until we see a significant deterioration in economic and financial fundamentals. 

In closing, I would like to remind you that there’s no time like the present to review your portfolio and make sure it is aligned with your goals. 

On behalf of everyone at SEI, thank you, as always for your trust and confidence. 
 

S&P 500 Index  is an unmanaged, market-capitalization weighted index that consists of the 500 largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market. 

Legal Note

Disclosures:
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. 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 fund performance. Index performance 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.
For those SEI Funds which employ the ‘manager of managers’ structure, SEI Investments Management Corporation (SIMC) has ultimate responsibility for the investment performance of the Funds due to its responsibility to oversee the sub-advisers and recommend their hiring, termination and replacement.

To determine if the Funds are an appropriate investment for you, carefully consider the investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Funds’ summary and full prospectuses, which may be obtained by calling 1-800-DIAL-SEI. Read it carefully before investing.

SEI Investments Management Corporation (SIMC) is the adviser to the SEI funds, which are distributed by SEI Investments Distribution Co (SIDCo). SIMC and SIDCo are wholly owned subsidiaries of SEI Investments Company.

Neither SEI nor its subsidiaries is affiliated with your financial advisor.
Not FDIC Insured
No Bank Guarantee
May Lose Value