Knowledge Centre

May
1
2013

Long-term Returns: Bonds Versus Stocks

Since the early 1980s, the interest rates on the European and U.S. government bond markets have dropped sharply, boosting bond returns. Depending on the period on which we look back, long-term bonds (with maturity dates longer than 10 years) have returned more than stocks, and with a much lower volatility. It is very unlikely that returns on long-term bonds in the next 10, 20 or even 30 years will beat stock returns again as the upward price potential for bonds is limited (while it is not for shares).
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May
1
2013

First Quarter 2013 Market Commentary

After an optimistic January, the mood in February and March was more downcast. Global equity markets held up well amidst the bad news in the quarter and outperformed the fixed income market. Risk appetite was apparent in the global fixed income markets and high yield bonds performed well.
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May
1
2013

Economic Outlook: Investors Keep Calm and Carry On

Although Europe is a mess, the U.S. markets keep growing. Can the growth continue? While past performance is no guarantee of future results, there are some signs that the answer is “yes.”
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Apr
3
2013

The U.S. Mortgage Market - Opportunity in the Wake of Crisis

The bubble and crash in the U.S. residential mortgage market resulted from a multitude of factors. The crash created widespread panic, a dramatic decline in asset values, and ultimately, opportunity. SEI’s SGMF US Fixed Income Fund has benefitted, and we believe opportunities remain in the mortgage sector.
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Apr
2
2013

February 2013 Monthly Commentary

After an optimistic January, the mood in February was more downcast. Major central banks remained accommodative in an effort to help stimulate growth. Global financial markets declined marginally. Risk appetite in fixed income markets continued to expand, while demand for risk within equities was more muted.
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Apr
2
2013

Europe Still Sour But Japan Sweetening?

The U.K. economy remains in the doldrums along with much of Europe. The political turmoil in Italy adds a new twist to the financial crisis saga at a time when the eurozone economy is sagging badly. The rally in the Japanese stock market remains robust and the selection of Haruhiko Kuroda as the governor of the Bank of Japan ensures that the central bank will pursue a more aggressive monetary path. SEI is maintaining current active tilts in our investment strategies, and we are watching for an entry point to increase our weighting to equities versus bonds.
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Apr
2
2013

Financial Crises - A “Hardy Perennial”

The dramatic financial crisis of 2008 caused severe market and economic dislocation. Although it was the largest in the U.S. since the 1930s, crises are an all-too-common feature of financial economies. A close look at the U.S. mortgage crisis reveals the dynamics of - and disagreements over - financial crises.
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Feb
27
2013

Strong Momentum and Elevated Sentiment

Stock markets started 2013 with a bang, which could bode well for full-year returns. We are cautious at the moment, as investor sentiment appears to be somewhat stretched. However, we believe that the underlying economic fundamentals validate the optimism reflected in stock prices.
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Feb
27
2013

"Sequestration"—Is the Sky About to Fall?

Some $85 billion worth of federal spending cuts are expected to take effect on March 1. While this looks like a large number, it amounts to only 2.4% of the federal budget and 0.5% of the U.S. economy. SEI sees no reason to adjust our investment strategies based on the potential impact of sequestration.
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Feb
27
2013

January 2013 Monthly Commentary

2012 ended on a positive note and this sentiment extended into and throughout January. Major central banks remained accommodative in an effort to help stimulate growth. Global equities experienced respectable gains for the month as investor sentiment remained buoyed, while global bonds declined marginally. Risk appetite in the financial markets was high in January.
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Jan
16
2013

Fourth Quarter Market Commentary

Investor focus switched from the U.S. elections to the looming U.S. “fiscal cliff” and ongoing worries surrounding the fate of the eurozone. Major central banks once again remained accommodative in an effort to help stimulate growth. Global equities experienced respectable gains for the quarter as investor sentiment improved, while global bonds declined marginally. Equities outperformed fixed income securities for the period as a whole.
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Jan
2
2013

Markets Climb a Cliff of Worry

Despite all the political and economic uncertainties in the world, financial assets registered robust gains in 2012. We expect 2013 to be characterized by improved global economic growth, less financial-market volatility in Europe and some calming of the political waters in the U.S. and elsewhere. While this should be good news for equity markets, we strongly believe that the 30-year secular bull market in bonds is drawing to a close.
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Jan
2
2013

The Fiscal Cliff: A Deal of Sorts

Despite the partial solution, we view the progress as a positive sign and (from an asset allocation perspective) plan to take a more aggressive, pro-cyclical stance in favor of equities as a result.
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Dec
18
2012

November 2012 Monthly Market Update

Investor focus remained on the looming “fiscal cliff” in the U.S. and on ongoing worries surrounding the fate of the eurozone in November. Major central banks once again remained accommodative in an effort to help stimulate growth.
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Nov
14
2012

October 2012 Monthly Commentary

Focus remained on Europe, the upcoming U.S. elections and slowing growth in China in October. Leading central banks remained accommodative in October as part of continued efforts to help stimulate global growth. Global equities and bonds both experienced losses in the month, with fixed income performing marginally better as investor sentiment waned. Within fixed interest, emerging market debt and high yield bonds did best. [... More]
Oct
2
2012

Economic Outlook: Central Banks to the Rescue

The Global Portfolio Strategies Group recently released its third-quarter 2012 Economic Outlook. Risky assets surged during the third quarter, building upon a rally that started in early June. Some of the strongest-performing markets had been among the worst performers for the better part of this year and last. Much has gone right in Europe over the past few months. Periphery countries have shown a greater willingness to work with the European Central Bank (ECB), which has stepped in as the lender of last resort in the eurozone. Much work remains to be done and an eventual Greek exit from the eurozone still seems likely in our view. [... More]
Sep
19
2012

August 2012 Market Update

Summer holidays meant a quiet month as market activity and trading volumes slowed. Riskier assets came back into favor thanks to stronger support from central banks. [... More]
Aug
17
2012

July 2012 Market Update

A degree of calm returned to the financial markets in July, but disappointing economic data ensured a subdued mood. [... More]
Jun
5
2012

Big Divergences, Still Looking for a Catalyst

May has been a challenging month for investors, with government debt fears, bank stresses and political upheaval in Europe causing renewed pessimism and another broad flight to safety. As a result, relative valuations have become quite stretched between U.S. equities and stock markets in Europe and emerging markets. While some indicators are inspiring a bit of optimism, we are maintaining our current positioning as we look out for potential catalysts. [... More]
May
18
2012

First Quarter 2012 Market Update

Investor confidence received a boost from continued central bank support in the U.S. and eurozone. Equity markets gained, with risky assets among the strongest performers. Bond market performance was held back by waning demand for government debt. [... More]
Jun
20
2011

U.K. Government Debt Downgrade: Would it Matter to Investors?

In recent weeks, major credit rating agencies (which rate bonds based on the ability of the issuer to repay the debt) have expressed renewed concern over the financial outlook for the U.K. This raises the question: "What are the implications for investors?" [... More]

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