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.
Stocks spent much of the second quarter embracing the remarkable rebound that began at the end of March.
The S&P 500 Index had its best quarterly performance since 1998. Globally, stocks fared almost as well, as the performance of the MSCI ACWI Index shows.
Despite the runaway rally through April and May, every major market besides China peaked in early June and failed to make new highs thereafter.
Taking a closer look, we can see that all U.S. equity sectors had positive performance. But that’s where the similarities end.
U.S. sector-level performance spanned a huge range. Utilities anchored the bottom end with a second-quarter return of 2.73%. Consumer discretionary stocks added another 30% gain on top of that, posting the second quarter’s best sector-level performance.
Both inside the U.S. and around the globe, 8 out of 10 sectors delivered double-digit performance for the quarter. We can see a generally similar pattern in MSCI ACWI Index sectors. The only notable difference is that the energy sector did not rebound quite as sharply outside of the U.S. Keep in mind, though, it didn’t fall as steeply last quarter either.
The renewed risk appetite was by no means confined to stocks. Fixed-income markets returned to more normal functioning thanks to an array of central-bank interventions. The big news here was that the U.S. Federal Reserver went as far as purchasing invididual corporate bonds.
Judging by second-quarter performance, the central bank efforts to calm markets worked. Emerging-market debt and high-yield bonds—the riskiest segments of the fixed-income universe—led the pack, but investment-grade corporates were right behind.
As we mentioned last quarter, making investment decisions based on challenging short-term conditions can be hazardous to your financial well-being.
The second-quarter’s rebound clearly showed that patience once again proven to be a virtue for investors.
We believe that a steady focus on your long-term financial goals and a commitment to the diversified investment portfolio designed to help you reach them is the smartest approach, in advancing and declining markets alike.
On behalf of everyone at SEI, thank you, as always for your trust and confidence.
Bloomberg Barclays U.S. Corporate Bond Index: The Bloomberg Barclays U.S. Corporate Investment Grade Index is a broad-based benchmark that measures the investment-grade, fixed-rate, taxable corporate bond market.
Bloomberg Barclays U.S. Treasury Index: The Bloomberg Barclays U.S. Treasury Index is an unmanaged index composed of U.S. Treasurys.
ICE BofA U.S. High Yield Constrained Index: The ICE BofA U.S. High Yield Constrained Index tracks the performance of below-investment-grade, U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market and caps exposure to individual issuers at 2%.
JPMorgan EMBI Global Diversified Index: 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: The JPMorgan GBI-EM Global Diversified Index tracks the performance of debt instruments issued in domestic currencies by emerging-market governments.
MSCI ACWI Index: The MSCI ACWI Index is a market capitalization weighted index composed of over 2,800 companies, and is representative of the market structure of 49 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.
S&P 500 Index: The 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
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).