Market Update

The Economy

• Economic news showed that the recovery has continued to take hold, echoing our view that the global economy will gradually improve, although growth might be slow for some time.
• Inflation in the U.K. rose in January to a full percentage point over the 2% target rate, but the Monetary Policy Committee stated it would not be tightening policy in the near term.
• U.K. retail sales dropped well below economists’ forecasts, as winter weather hindered consumer spending.
• The U.S. Federal Reserve raised its discount rate (which is the rate it charges to banks borrowing money) by 25 basis points to 50 basis points but reiterated that the federal funds rate (the rate banks charge each other to borrow money) will stay at record lows for “an extended period of time.”
• In the U.S., the initial construction of new houses hit a six-month high in January, and factory output rose for the seventh consecutive month.
• The U.S. Consumer Price Index (CPI), a measurement of price inflation, posted a 0.2% increase, mostly due to higher fuel costs; the increase was less than expected and reflected subdued inflation. 
• U.S. jobless claims grew unexpectedly by 31,000 to a seasonally adjusted level of 473,000.

Stocks

• Global markets posted solid gains on news that the economic recovery is slowly taking hold.
• In the U.K., Financials and Materials led, while Utilities, Healthcare and Telecommunications lagged.
• In Europe, Industrials, Information Technology and Financials led, while Utilities, Healthcare and Consumer Staples lagged.
• In the U.S., value stocks modestly underperformed their growth counterparts, and small-company stocks outperformed their large-company brethren. Industrials led the way, while Telecommunications lagged.

Bonds

• Major government bond prices fell on positive economic data.
• High-yield bonds (which are perceived to be riskier) significantly outperformed the broader bond markets, and emerging-market debt (also perceived to be riskier) posted modestly positive returns.
• U.S. Treasury Inflation-Protected Securities (TIPS), which are inflation-linked notes (whose payments change based on an increase or decrease in inflation) issued by the U.S. Treasury, were mostly unchanged after the CPI numbers were released, showing that expectations for inflation are still minimal.
• Yields on the U.K. 10-year gilt rose to 302 basis points, higher than the two-year and the most since mid-November.

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. While considerable care has been taken to ensure the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information.

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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.