Kevin Barr, head of SEI's Investment Management Unit, provides an overview of the global financial markets and our perspective on them.

Watch the video

Transcript

Hi, I'm Kevin Barr, head of SEI's Investment Management Unit. Over the next few minutes, I'll provide an overview of the global financial markets and our perspective on them.

Major equity market indices battled their way toward all-time highs through July and August, before taking a choppy path lower in September. U.S. equities were able to remain just above break even for the quarter. Globally, however, shares were modestly lower for the full period driven by a growing list of challenges. A run-up in the interest rates around the world accelerated in September, replicating the dynamic that chilled markets back in February.

China's regulatory steps to reign in e-commerce companies and for-profit schools, coupled with the debt problems and its real estate sector rattled markets late in the quarter.

We can see that September's performance pushed much of the developed world into negative territory for the third quarter. Emerging Market Performance was concentrated at the bottom end of the range by China and Brazil. The latter struggled with high inflation forcing its central bank into a cycle of rate hikes, lowering prospects for future growth. From a sector perspective, energy and financials were the sole notable gainers for the full third quarter. Energies runaway performance in September contributed to the negativity that pervaded the rest of the market, as rising energy costs put direct pressure on the bottom line for most firms.

The value growth tug of war continued throughout the period. The third quarter began amid of reversal of the rotation to value leadership that started last November. Growth had regained the initiative as the delta wave challenged developed market reopening plans, pushing investors back into big work from home technology stocks and other expensive growth companies.

Despite the setback, the value growth performance story was mixed across global markets. Growth really started to press the advantage in mid-quarter, but it was short-lived. Value decidedly outpaced growth in U.S. small caps in emerging markets, while gross lead in U.S. large and international developed shares, narrowed in the end of the quarter.

Fixed income performance helps tie together several of the quarters major themes, including challenges in China and other emerging markets, rising interest rates, and persistent inflation. Inflation protected securities carried the quarter, despite a poor showing in September as the accelerating pace of interest rate increases dampened inflation expectations at the margin. We can also see the impact rising interest rates had on investment grade corporate bonds and treasuries, both of which were flat for the quarter after a tough September.

Looking ahead, we believe the recent gloom about flagging economic growth is a bit overdone and that perceptions will shift for the better as the delta wave passes. We expect global economic growth to continue at a meaningful rate over the next year or two, and believe that value stocks have additional room for gains. Around the world, the earnings of publicly traded companies also remain robust, and we believe analysts are still underestimating their strength. This low bar could allow for upward revisions and earnings estimates, assuming, as we do, that the normalization of global economic growth gets back on track.

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

Expand

Legal Note

Important Information
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. Positioning and holdings are subject to change. All information as of the date indicated. There are risks involved with investing, including possible loss of principal. This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information.
Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results.
Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI.
There are risks involved with investing, including loss of principal. The value of an investment and any income from it can go down as well as up. Investors may get back less than the original amount invested. Returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Investment may not be suitable for everyone.

Additional information

This material is not directed to any persons where (by reason of that person's nationality, residence or otherwise) the publication or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not rely on this information in any respect whatsoever.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional.

Information in the U.S. is provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI). Information provided in Canada by SEI Investments Canada Company, the Manager of the SEI Funds in Canada.

Information issued in the UK by SEI Investments (Europe) Limited, 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR which is authorised and regulated by the Financial Conduct Authority. Investments in SEI Funds are generally medium- to long-term investments. The offer or invitation to subscribe for or purchase shares of the Sub-Funds (the “Shares), which is the subject of this Information Memorandum, is an exempt offer made only: (i) to "institutional investors" pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the “Act”), (ii) to "relevant persons" pursuant to Section 305(1) of the Act, (iii) to persons who meet the requirements of an offer made pursuant to Section 305(2) of the Act, or (iv) pursuant to, and in accordance with the conditions of, other applicable exemption provisions of the Act.

SIEL has appointed SEI Investments (Asia) Limited (SEIAL) of Suite 904, The Hong Kong Club Building, 3 Jackson Road, Central, Hong Kong as the sub-distributor of the SEI UCITS funds. SEIAL is licensed for Type 4 and 9 regulated activities under the Securities and Futures Commission ("SFC").

This information is being made available in Hong Kong by SEIAL. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

This information is made available in Latin America FOR PROFESSIONAL (non-retail) USE ONLY by SIEL.

Any questions you may have in relation to its contents should solely be directed to your Distributor. If you do not know who your Distributor is, then you cannot rely on any part of this document in any respect whatsoever.

Issued in South Africa by SEI Investments (South Africa) (Pty) Limited FSP No. 13186 which is a financial services provider authorised and regulated by the Financial Sector Conduct Authority (FSCA). Registered office: 3 Melrose Boulevard, 1st Floor, Melrose Arch 2196, Johannesburg, South Africa.