To keep you abreast of current market conditions, we invite you to view me presenting SEI’s “Third Quarter 2014 Investment Review” video . This brief video will provide you a synopsis of our positioning around the markets, the impact to the investment strategies, and our outlook going forward.
Concerns about the magnitude and timing of an interest rate hike in the U.S. combined with geopolitics and global growth concerns to push market volatility higher. For investors exposed to the U.S. dollar, currency impact put a serious dent in returns for non-U.S. assets as the greenback strengthened against most currencies.
What’s happening in the market?
• In U.S. dollar terms, the MSCI All Country World Index, which serves as a proxy for global equities, slipped by over 2% for the quarter. U.S. large-cap stocks, U.S. Treasury bonds and U.S. corporate bonds set the pace, as investors sought relatively less volatile asset classes.
• In fixed-income, the Barclays Global Aggregate Index, which represents global bond markets, fell over 3% for the quarter in U.S. dollar terms but rose in most other currencies.
• U.S. equity markets, represented by the S&P 500 Index, were up 1.13% for the quarter. On the fixed-income side, the Barclays U.S. Aggregate Bond Index was barely positive at 0.17%. U.S. small caps, emerging-market debt and other aggressive asset classes struggled in a volatile quarter. On the fixed-income side, higher quality bonds outperformed lower-quality issues.
What’s the Impact to our investment Strategies?
• In this environment, SEI’s strategies faced a challenging quarter, with more defensive strategies coming in relatively flat and more aggressive strategies struggling.
Outlook and Perspective:
• We continue to see divergences in global economic policy, with Europe seeking to foster growth and fend off deflation and the U.S. reigning in stimulus. Concerns about the magnitude and timing of an interest rate hike in the U.S. combined with geopolitics and global growth concerns are likely to keep volatility at elevated levels as the year moves into its final quarter.
If you have any questions or would like to discuss this further, please feel free to give me a call.