US Quarterly Update Q3 2018
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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.
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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.
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