Market Update

The Economy

• A few bright spots emerged despite concerns that the global recovery has stalled.
• U.S. Federal Reserve (Fed) Chairman Ben Bernanke reiterated that the Fed is ready to remove accommodative efforts (such as low interest rates and purchasing programs) when necessary.
• The Australian central bank raised its overnight cash rate by 25 basis points to 3.25%, becoming the first G-20 nation to tighten interest rates after the global downturn.
• In the U.K., the price of factory goods rose 0.5% from August, which was better than forecast.
• The U.S. Institute for Supply Management’s Non-Manufacturing Index posted stronger-than-expected numbers, showing expansion for the first time in a year. As this accounts for 90% of the economic output, it was an encouraging sign.
• U.S. jobless claims showed the largest decrease since January, and continuing claims also fell.
• Sterling fell against the dollar on speculation the UK economy remains too weak for the central bank to consider raising rates.
• The U.S. dollar fell to a 14-month low at the end of the week, following a sharp decline earlier in the week when it was reported that China and Arab nations are working with France and Russia to re-price oil against a basket of securities instead of the dollar.
• While we’re glad to see some good news, we don’t view it as a sign that all is well, but rather as a smooth patch in what we expect will be a long and bumpy ride on the slow road to recovery.

Stocks

• Global markets rose higher as risk appetite increased.
• U.S. equity markets edged higher on improving economic news and some strong third-quarter earnings.
• European stocks had their steepest weekly advance since July.
• For the U.S., U.K. and Europe, value stocks outperformed their growth counterparts, and small-cap stocks outperformed their large-cap brethren.
• Investors increased their risk tolerance by investing cash in assets perceived to be riskier, which was partially evident from the decline of the U.S. dollar.
• In the U.S., Energy and Materials stocks rose higher as the dollar weakened.
• Globally, cyclical stocks (which are more sensitive to movements of the broader market) such as Materials also had a strong week.

Bonds

• Major government bond yields rose across the globe; gains were added after the Fed suggested rates would rise when the U.S. economy had “improved sufficiently.”
• Non-government bond sectors also posted positive returns, and the difference between these yields and government bond yields narrowed.
• Riskier areas of the fixed-income markets led gains amid strong demand from investors looking for extra yield from taking on added risk.
• Emerging-market debt and commercial mortgage-backed securities (which are made up of multiple commercial mortgages packaged into a single security) performed best, and corporate and high-yield bonds showed strong performance as well.

Important Information:

Past performance is not a guarantee of future performance. Investment in the range of SEI’s Funds is intended as a long-term investment. The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. Additionally, this investment may not be suitable for everyone. If you should have any doubt whether it is suitable for you, you should obtain expert advice.

No offer of any security is made hereby. Recipients of this information who intend to apply for shares in any SEI Fund are reminded that any such application may be made solely on the basis of the information contained in the Prospectus. 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 regarding the funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.

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SEI sources data directly from the following vendors: Factset, MSCI Barra, Russell, TOPIX, FTSE, Barclays Capital and Merrill Lynch. Where appropriate, returns in base currencies are converted to the relevant currency using WM Reuters 4pm Spot rates.