SEI Vantage: Consensus. Third quarter 2026

October 27, 2026

5 MIN READ

We share our surveyed managers' optimism on equities; they represent a claim on the nominal gross domestic product (GDP) boom, and our preferred method for participation. This view is driven by expectations for continued earnings growth, not multiple expansion given rising rates. We favor real-asset equities and real-economy sectors (energy, materials, and infrastructure). Under the hood, our house view differs from that of our managers in terms of regions. Namely, we're relatively more bullish on developed international equities, and less bullish on emerging markets.

U.S. Large Cap: Inflation pass-through supports nominal earnings. We prefer to participate through composition (value, quality, energy, financials), not through paying the multiple on headline U.S. large cap.
U.S. Small Cap: Floating-rate leverage meets a rising funds rate and a 2027 refinancing wall, coupled with a limited margin of safety as 40% of the index doesn't earn. Our preferred expression is relative to large cap rather than outright short.
International (Developed ex U.S.): We prefer Japan and U.K. to continental Europe; we favor unhedged exposure to provide upside should the yen appreciate.
Europe: We see the energy-importer terms-of-trade shock and tightening from the European Central Bank (ECB) serving as a drag against an index that benefits from steeper curves given its emphasis on value and financials.
U.K.: The FTSE 100 Index's exposure to energy, materials, and financials suits it well for this regime; domestic stagflation and the gilt fiscal premium are key risks. We are watching for earnings revisions to confirm the composition story.
Japan: Given the Bank of Japan’s (BoJ) rate increases with reflation intact and the persistence of governance reform flows, Japan’s value- and financials-heavy index composition is well aligned with a rising-rate world.
Canada: The country’s energy and financials composition fits the regime; household leverage and housing sensitivity to a hiking Bank of Canada cap the domestic economy. The ongoing trade spat with the U.S. poses a risk to growth.
Emerging Markets: This view is expressed relative to our developed markets overweight. A hiking Federal Reserve (Fed), firm U.S. dollar (USD) carry, and the energy shock tax the large emerging-market importers, with Emerging Asia particularly susceptible. We see short-term dollar strength, but long-term dollar erosion.

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