Q3 2018 Investment Review

October 19, 2018

US Quarterly Update Q3 2018


Click to read the transcript

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.

U.S. equities advanced throughout the third quarter. The S&P 500 Index rose 7.7%, outpacing a modest gain in Europe and a decline in emerging markets.

All U.S. sectors were positive as the economy remained strong and trade deals were reached with Mexico and Canada. Healthcare was the top-performing sector followed by industrials, telecommunication services, and information technology. The materials and energy sectors saw the most modest returns.

By contrast, the MSCI ACWI Index, a proxy for global equity markets, gained 4.3% for the quarter.
In this environment, SEI’s strategies saw mixed results. Like many active managers, our preference for value-oriented stocks, and the resulting underweight to pricey tech shares, detracted as technology companies drove large-cap performance. Small-caps had a good quarter, while international equities struggled.

In fixed-income markets, U.S. high-yield bonds once again set the pace. Emerging-market debt issued in foreign currencies was positive as were U.S. investment-grade corporate bonds. Securitized bond sectors were mixed. U.S. Treasurys and Treasury Inflation-Protected Securities were down during the quarter as strong economic data supported the case for continued rate increases by the Federal Reserve. Developed-market sovereign bonds and local-currency emerging market debt struggled, as growing trade pressures and rising interest rates increased borrowing costs in emerging markets.

Looking ahead, trade tensions with China will likely continue into the New Year and expected interest rate hikes by the Federal Reserve are raising concerns.

These challenges are offset by the strong economic and financial fundamentals in the U.S. that we believe will continue to support the stock market. Accordingly, our outlook for the rest of the year remains cautiously optimistic.
On behalf of everyone at SEI, thank you, as always for your trust and confidence.

Legal Note

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