Market Update

The Economy

• Further setbacks in the form of concerns about government bonds in several European countries and disappointing U.S. employment data resulted in a cautious tone for the market, which continues to reflect our view that the road to recovery will likely be bumpy.
• The Bank of England kept rates unchanged at 0.5% and decided not to extend its bond-buying programs. These announcements resulted in negative investor sentiment, as uncertainty still looms regarding the economic effects of taking away these accommodative policies.
• The European Central Bank voted to keep interest rates at a record low of 1%.
• German industrial production fell unexpectedly in December.
• In the U.S., the Institute for Supply Management (ISM) survey on manufacturing activity showed month-over-month gains.
• U.S. non-manufacturing activity was flat month over month, according to ISM.
• U.S. job losses for December were revised downward from a decline of 85,000 to a decline of 150,000. However, a gain of 11,000 jobs in the manufacturing sector was a positive development.
• The U.S. unemployment rate decreased to 9.7%. 

Stocks

• Global markets fell for the week on gloomy U.S. employment news and increasing fears about potential defaults on European government debt. Investors began a flight to safety, focusing on more defensive assets.
• In the UK, equity markets fell; Financials, Materials and Energy had the largest declines. Telecommunications posted the only positive sector return.
• In Europe ex-UK, equity markets fell by a larger amount than they did in the UK due to the government debt crises of Portugal, Ireland, Greece and Spain. Information Technology, Healthcare and Materials performed best, while Financials, Energy and Consumer Services lagged.
• In the U.S., growth stocks outperformed their value counterparts, due largely to declines in Financials, which are usually categorized as value stocks (prices cheaper relative to earnings).
• Gold and oil both declined for the week, and the U.S. dollar strengthened.

Bonds

• Global bond markets were flat for the week on uncertainties surrounding the global economic recovery.
• U.S. and UK government bonds outperformed European bonds on heightened worries about government debt in several euro zone countries.
• Global high-yield and corporate bonds underperformed the broader market, as investors avoided riskier assets on weak economic news.
• Credit-default swaps (insurance against bond issuers failing to make payments) on the government debt of Portugal, Ireland, Greece and Spain rose to record highs, increasing fears of default.

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. If the investment is withdrawn in the early years it may not return the full amount invested. In addition to the normal risks associated with equity investing, international investments may involve risk of capital loss from unfavourable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments and smaller companies typically exhibit higher volatility. Products of companies in which technology funds invest may be subject to severe competition and rapid obsolescence. SEI Funds may use derivative instruments such as futures, forwards, options, swaps, contracts for differences, credit derivatives, caps, floors and currency forward contracts. These instruments may be used for hedging purposes and/or investment purposes.

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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.