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

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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.

The stock-market recovery that began at the end of March continued well into the third quarter around most of the world.

While the third quarter’s gains paled in comparison to the second quarter’s approximately 20% returns in both the U.S. and globally, they were still notable. Combined, the second and third quarters delivered the best back-to-back performances for both the S&P 500 and MSCI ACWI Indexes since 2009.

It’s hard to look at end-of-period performance and suggest that the third quarter was disappointing, but we can see that some serious weakness crept back into the market at the beginning of September.

For a closer look, we compared full-quarter performance for both U.S. and global equity sectors against their September returns.

Before September arrived, the energy sector was the sole negative performer. In September, telecoms, technology and consumer discretionary market leaders to one degree or another in recent years…tumbled.

Aside from the energy sector, which suffered most of its decline in September, the other sectors were still able to deliver big full-quarter returns given that they started from such lofty heights.

Applying the same “tale of September” analysis to the various segments of the fixed-income universe, we can see that there were some elements of a traditional recovery in riskier sectors, while others were absent.

High-yield led for the full quarter, while Treasurys lagged, which seems like a straightforward “risk-on” scenario. But emerging-market debt, which is another “risk on” segment, gave back a big share of its gains during September.

It has already been an eventful year, and we expect that trend to continue in the fourth quarter. 

The spread of COVID-19 will remain in the news, as will efforts to develop a vaccine. International trade agreements, government debt levels and central bank policy are among the many things changing as 2020 moves into its closing months. The U.S. presidential election and Brexit are also on the radar.

While there could be some market volatility attributed to these events, we believe it is usually best to pay strict attention to market fundamentals and ignore the noise. We encourage investors to remain committed to a globally diversified investment portfolio as a prudent approach to pursing your financial goals regardless of economic or political developments.

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

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Claim that the combined second and third quarter 2020 returns for the MSCI ACWI Index and S&P 500 Index represented their best respective back-to-back performances since 2009 is based on index performance data sourced from the SEI Data Portal and provided by MSCI and S&P Dow Jones Indices.

Index Descriptions 

  • Bloomberg Barclays 1-10 Year US TIPS Index: The Bloomberg Barclays 1-10 Year US TIPS Index measures the performance of inflation-protected public obligations of the U.S. Treasury that have a remaining maturity of 1 to 10 years.
  • 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

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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. 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. There is no assurance as of the date of this material that the securities mentioned remain in or out of the SEI Strategies. Positioning and holdings are subject to change. All information as of September 30, 2020.

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