Most equity markets finished in positive territory during the fourth quarter of 2022, trimming their losses for the full calendar year. Developed-market stocks marginally outperformed their emerging-market counterparts. Regionally, emerging markets in Europe generated the world’s strongest equity gains over the quarter, while developed markets in Europe and the Asia-Pacific region also performed well.2 Conversely, the North American market lagged as U.S. stocks posted relatively smaller gains.3

Despite the upturn in the fourth quarter, both fixed-income and equity markets chalked up big losses for the full 2022 calendar year—almost regardless of region or style. U.S. long-duration bonds, as represented by the Bloomberg Long U.S. Government/Credit Index, endured a stunning decline of 27%, exceeding the sharp losses sustained by U.S. and international equities. While emerging-market equities and bonds fared relatively better, the only asset class to post a positive absolute return for the year was commodities.

Yields on U.S. Treasury securities rose in the short and long parts of the curve over the quarter and declined modestly in the intermediate segment (yields and prices have an inverse relationship). Short-term yields increased by a larger margin than long-term yields. Consequently, the 2-to-10-year yield curve inverted further (short-term yields exceeded long-term yields), widening by 0.14% to 0.53%. U.K. gilt yields decreased across the curve during the reporting period. Eurozone government bond yields increased for all maturities, particularly at the short end of the curve.

U.S. fixed-income asset classes garnered positive returns in the fourth quarter as intermediate-term bond yields declined. High-yield bonds led the rally, while investment-grade corporate bonds also performed well.4

There was mixed performance in the global commodities markets during the quarter, The West Texas Intermediate crude-oil spot price was up 1.2% for the period due to continued strength in the U.S. dollar, while the Brent crude-oil price fell by 2.3% on investors’ worries about recession. The NYMEX natural gas price declined nearly 34% during the period as forecasts for relatively warmer winter weather in the U.S. spurred concerns of weakening demand. Wheat prices decreased by 14%, hampered by larger-than-expected shipments by Russia.5

Liz Truss resigned as U.K. prime minister in late October after the disastrous reception of her fiscal program sent gilt and sterling markets reeling, collapsing her support within the Conservative Party. Her departure cleared the way for Rishi Sunak to ascend as Conservative leader and prime minister. Sunak was forced to deal with his first domestic crisis as prime minister just weeks after succeeding Truss, when members of trade unions representing National Health Service (NHS) nurses, ambulance workers and rail and Border Force employees staged targeted strikes over compensation and working conditions.6 Negotiations with the unions have proven especially challenging given that, in October, U.K. Chancellor Jeremy Hunt had announced his intention to reduce the government’s £55 billion (roughly US$66 billion) deficit through tax increases and drastic spending cuts. Under the government’s current deficit-reduction plan, a gross domestic product (GDP) growth rate of 2% would result in savings of approximately £23 billion (about US$27.6 billion) for the U.K. government by the 2027-to-2028 fiscal year.7,8

In November, Ukraine’s military regained control of the southern city of Kherson as Russian Defense Minister Sergei Shoigu ordered his troops to retreat from what had been sole regional Ukrainian regional capital that Moscow had held since invading the country in late February of this year. This was a major setback for Russia’s Vladimir Putin. Ukraine’s president, Volodymyr Zelenskyy, addressed a joint session of the U.S. Congress in late December in an effort to secure additional financial aid from the U.S. and its allies. President Joe Biden reiterated the U.S. government’s support for Ukraine in its conflict with Russia. In late December, the U.S. Congress approved $US45 billion in additional financial assistance to Ukraine.

Chinese President Xi Jinping’s administration faced anti-government demonstrations across the country in November in response to its zero-tolerance policy regarding COVID-19. Local police forces moved quickly to diffuse the protests, which China’s National Health Commission (NHC) blamed on local governments; a spokesperson for the NHC stated that some local authorities “take a one-size-fits-all approach, and take excessive policy steps that have neglected the demands of the public.”9 Xi’s administration announced an initiative to accelerate vaccinations for elderly citizens in an effort to ease the COVID-19- induced restrictions. The government subsequently announced that it will end all quarantine requirements and permit international travelers to enter the country beginning in early January.

In Latin America, Luiz Inácio Lula da Silva (Lula) of the progressive Workers’ Party won Brazil’s presidential election in November by a narrow margin over the conservative incumbent, President Jair Bolsonaro. Lula, who previously served two terms as Brazil’s president from 2003 to 2011, returned to office on January 1 amid political tensions and a foggy economic outlook due to concerns about high interest rates, fiscal uncertainty, and the broader global slowdown.10

Economic data

U.S.

• The Commerce Department’s Personal Consumption Expenditures (PCE) Index—the Federal Reserve’s (Fed) preferred inflation measure as it excludes volatile food and energy prices—continued to slow in November, to 0.1% from 0.3% for the month and to 6.0% from 6.3% for the 12-month period. Overall inflation (as measured by the Department of Labor’s consumer-price index) also improved in November; it eased to a lower-than-expected 0.1% after increasing by 0.4% for the second straight month in October, and it registered the slowest year-over-year increase since December 2021 with an annualized 7.1% rate versus 7.7% for the previous month.
   
• The U.S. employment situation remained robust. The Department of Labor reported that nonfarm payrolls gained 263,000 in November—beating the 200,000 estimate, but slowing from October’s upwardly revised 284,000. The unemployment rate ticked up 0.2 percentage points to 3.7%, while the laborforce participation rate (the percentage of the population aged 16 or older and employed or actively seeking employment) dipped by 0.2% to 62.1%. Average hourly earnings increased by 0.6% in November and 5.1% over the 12-month period.
   
• The U.S. economy continued to improve in the third quarter, expanding at an annualized rate of 3.2% (up sharply from the Commerce Department’s initial estimate of 2.6%)—after contracting at annualized rates of 1.6% in the first quarter and 0.6% in the second quarter.
   
• The Institute for Supply Management’s Purchasing Managers’ Index (PMI) of U.S. manufacturing activity was down 0.6 to 48.4 in December—its second straight monthly decline following 29 consecutive months of expansion. A PMI reading below 50 indicates contraction in the manufacturing sector in the U.S.11

U.K.

• Consumer prices in the U.K. increased in November, but decelerated by 0.3% to 0.4% for the month and by 0.4% to 10.7% for the 12-month period.12
   
• According to the Office for National Statistics, U.K. GDP decreased by 0.3% in the third quarter of 2022 (revised slightly lower from the initial estimate of a 0.2% decline). Growth in education, professional, scientific and technical activities, and public administration and defense were offset by declines in wholesale and retail trade, other services activities, and arts, entertainment and recreation.
   
• U.K. manufacturing activity contracted for the fifth consecutive month in November.13 The contraction resulted from reduced inflows of new business, supply-chain disruptions, and ongoing shortages of numerous components in international markets.
   
• Activity in the U.K. services sector increased in December, with the Flash UK Services PMI Business Activity Index rising 1.1% to 49.9%, after falling sharply in October and remaining steady in November.14 Nonetheless, a reading below 50% indicates contraction in the service sector of the economy.

 

Eurozone

• Inflation in the eurozone slowed in the 12-month period ending November by 0.6% to 10.0%.15 Energy and food prices saw the largest increases for the month.
   
• Eurozone manufacturing activity remained in contraction territory during the fourth quarter, although the S&P Global Eurozone Manufacturing PMI reached a three-month high of 47.8 in December.16
   
• Services activity in the eurozone declined for the fifth consecutive month in December after expanding for straight months from March 2021 to July 202217. However, the S&P Global Eurozone Services PMI improved in December by 0.6 points to 49.1—its highest reading in four months.
   
• Eurozone economic growth slowed in the third quarter to 0.4% from 0.8% over the three-month period and to 2.3% from 4.3% year over year.18

 

Central banks

• The Fed raised the federal-funds rate by 0.50% in December following a 0.75% increase in November—bringing its benchmark rate to a range of 4.25% to 4.50%. This has resulted in higher borrowing costs for consumers and businesses. In a December statement, the U.S. central bank’s policy makers said they expect further increases in an effort to reduce inflation to the Fed’s 2% target over time and will adjust monetary policy, as necessary, in order to meet its objectives.
   
• The Bank of England (BOE) raised its benchmark interest rate by 0.75% to 3.0% in early November before increasing by 0.5% to 3.5% in December. After the December hike, the BOE noted that global supply- chain constraints have eased, but global inflation is still elevated. Although labor demand has begun to ease, the labor market remains tight.19
   
• The European Central Bank (ECB) boosted its benchmark interest rate to 2.0% after implementing increases of 0.75% and 0.5% in October and December, respectively. Following its most recent hike, the ECB commented, that interest rates will still need to rise significantly at a steady pace to reach its 2% medium-term target.20 Additionally, the central bank’s applicable rates for its third targeted longer-term refinancing operation (TLTRO III) aligned with its depositfacility rate on November 23. The lending facility was originally established to foster credit availability but has essentially enabled bank subsidies as interest rates have risen, prompting the ECB’s action.
   
• At its meeting in December, the Bank of Japan (BOJ) unexpectedly announced that it would allow the 10-year Japanese government bond yield to move 0.5% below or above the central bank’s 0% target, doubling the previous 0.25% limit. After the announcement, BOJ Governor Haruhiko Kuroda said, “Today’s step is aimed at improving market functions, thereby helping enhance the effect of our monetary easing. It’s therefore not an interest rate hike. This change will enhance the sustainability of our monetary policy framework. It’s absolutely not a review that will lead to an abandonment of [yield curve control] or an exit from easy [monetary] policy.”21

 

SEI’s view

First, the good news for investors: 2022 is over. Now for the bad news: 2023 is shaping up to be another challenging year. Further volatility is expected across asset classes as investors face familiar headwinds: inflation rates exceeding the targets of major central banks; interest-rate increases potentially continuing throughout the first half of the year; quantitative easing shifting to quantitative tightening; and, for many countries, stagnant or recessionary economies through 2023, and perhaps, into 2024.

We are projecting a less robust global economy in 2023 than the one witnessed in the past year. “Stagnation” is probably the best word for it, while “recessionary” almost certainly will apply in some countries and regions. It is not at all clear to us whether the U.S. will be one of those countries, although surveys of economists published by the Federal Reserve (Fed) Bank of Philadelphia, the Wall Street Journal, and the National Association of Business Economics suggest a greater than 50% chance of recession. It’s unusual for economists to be so bearish—we’re only half-joking when we say that this is the most anticipated recession in the history of recessions. Wages are down in inflation-adjusted terms, the housing market is suffering a severe contraction, and some industries (notably within technology) are now losing a significant number of jobs. However, the overall economy still isn’t declining in a pronounced, pervasive, and persistent manner— the so-called “three Ps”—that characterize a typical recession.

With regard to inflation, there is good reason to believe that inflation rates have peaked for most countries. Still, we view it as a mistake to assume that prices will fall as precipitously as they have risen, or that they will make their way back to the 2% target that central banks of advanced economies set for themselves. This is especially true in the U.S. and other countries challenged by exceptionally tight labor markets and already-high wage inflation.

Moving on to monetary policy, even though Fed Chair Jerome Powell and other members of the Federal Open Market Committee retired the reference to “transitory” from the Fed’s lexicon when describing inflation, the central bank’s own (and investors’) forecasts still held onto the assumption that inflation pressures would ease substantially in 2022. Consequently, the Fed’s projections of the federal-funds rate issued in December 2021 were well below the actual rate increases that the central bank implemented in the past year. Further Fed monetary policy tightening is expected in 2023, with a year-end median prediction of 5.1% and a central-tendency forecast (incorporating the majority of FOMC decision-makers) of 5.1% to 5.4%. The obvious question is whether this unexpectedly forceful approach taken by the Fed this past year and, presumably, in the year ahead, will be sufficient to bring inflation down. Or will it still prove insufficient, thereby forcing the central bank to keep raising its policy rate beyond its current expectations?

On the geopolitical front, although the war in Ukraine rages on, energy prices have posted surprisingly sharp declines. Natural-gas prices in Europe are the exception. With the war in Ukraine appearing likely to drag on well into 2023 at the very least; the possibility exists for more surprises that will keep energy prices quite volatile, with current prices likely now at the low end of a wide trading range.

It appears that the Chinese government has decided to ease the most onerous COVID-19 restrictions that have derailed economic growth in that country and disrupted global supply chains. We had suggested that, once the Communist Party Congress was out of the way and President Xi Jinping received an unprecedented third term as the party’s General Secretary, he would seek an exit from his zeroCOVID policy. The government has moved even faster than we had expected, and we expect China’s economy to reaccelerate in the year ahead from last year’s very tepid 3% performance. This should help offset at least partially the impact of a global slowdown in advanced countries. It also could exert upward pressure on commodity prices, especially for energy and metals. This would benefit commodity-oriented exporters in Latin America and the Middle East, along with South Africa, Indonesia and Malaysia.

Glossary of Financial Terms

Stagnation is a prolonged period of little or no growth in an economy.

Duration is a measure of a security’s price-sensitivity to changes in interest rates. Specifically, duration measures the potential change in value of a bond that would result from a 1% change in interest rates.

Gilts are sovereign debt securities issued by the U.K. government.

Mortgage-backed securities (MBS) are pools of mortgage loans packaged together and sold to the public. They are usually structured in tranches (a slice or portion of a structured security) that vary by risk and expected return.

Gross domestic product (GDP) is the total monetary or market value of all the goods and services produced in a country during a certain period.

The federal funds rate is the interest rate charged to lending institutions on unsecured overnight loans. It is set by the U.S. Federal Reserve’s Federal Open Market Committee. The rate is increased when the Federal Reserve wants to discourage borrowing and slow the economy and decreased when the Federal Reserve wants to spur economic growth.

Yield curve represents differences in yields across a range of maturities of bonds of the same issuer or credit rating (are (which is used to assess the risk of default of companies or countries). A steeper yield curve represents a greater difference between the yields. A flatter curve indicates the short- and long-term yields are closer together.

Monetary policy refers to decisions by central banks to influence the amount of money and credit in the economy by managing the level of benchmark interest rates and the purchase or sale of securities. Central banks typically make policy decisions based on their mandates to target specific levels or ranges for inflation and employment.

Fiscal policy relates to government revenue, taxation or public debt.

Targeted longer-term refinancing operations (TLTRO) are Eurosystem operations that provide financing to credit institutions. By offering banks long-term funding at attractive conditions, they preserve favorable borrowing conditions for banks and stimulate bank lending to the real economy.

Yield curve control comprises the targeting of a longer-term interest rate by a central bank, which then buys or sells as many bonds as necessary to hit that rate target.

Quantitative easing refers to expansionary efforts by central banks to help increase the supply of money in the economy. These actions include the purchase of long-term government bonds and mortgage-backed securities (pools of mortgage loans packaged together and sold to the public).

Quantitative tightening refers to efforts by central banks to decrease the supply of money in the economy.

Index Descriptions

All indexes are quoted in gross performance unless otherwise indicated.

The Nasdaq Composite Index is a market capitalization-weighted index that tracks the performance of all domestic and international companies listed on the Nasdaq Stock Market. Technology stocks comprise nearly 50% of the index’s weighting.

The MSCI Emerging Markets Index is a free float-adjusted (i.e., including only shares that are available for public trading) market capitalization-weighted index that tracks the performance of emerging-market equities.

The MSCI World Index tracks the performance of the large- and mid-cap segments of equity markets across 23 developed-market countries. The index’s 1,517 constituents comprise approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization in each country.

The MSCI World ex USA Index tracks the performance of the large- and mid-cap segments of equity markets across 22 of 23 developed- market countries--excluding the U.S. The index’s 887 constituents comprise approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization in each country.

The MSCI China Index captures large and mid-cap representation across China H shares, B shares, Red chips and P chips. The index’s 151 constituents, comprise about 85% of this China equity universe.

The MSCI Emerging Markets Europe Index is a free float-adjusted (i.e., including only shares that are available for public trading) market capitalization-weighted index that tracks the performance of large- and mid- cap representation across 14 developed-market countries in Europe.

The MSCI Emerging Markets Asia Index tracks the performance of large- and mid-cap stocks representing approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization of China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand.

The MSCI North America Index tracks the performance of the large- and mid-cap segments of the U.S. and Canada markets. With 712 constituents, the index covers approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization in the U.S. and Canada.

The MSCI USA Index tracks the performance of the large- and mid-cap segments of the U.S. market. With 624 constituents, the index covers approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization in the U.S.

The Bloomberg Long U.S. Government/Credit Index tracks the performance of all medium and larger public issues of U.S. Treasury, agency, investment-grade (rated BBB- or higher by S&P Global Ratings/Fitch Ratings or Baa3 or higher by Moody’s Investors Service) corporate, and investment-grade international dollar-denominated bonds with a remaining maturity longer than 10 years.

The Bloomberg Commodity Total Return Index is composed of futures contracts and reflects the returns on a fully collateralized investment in the Index. This combines the returns of the Index with the returns on cash collateral invested in 13-week (3-month) U.S. Treasury bills.

The Bloomberg Global Aggregate Bond Index is a market capitalization-weighted index that tracks the performance of investmentgrade (rated BBB- or higher by S&P Global Ratings/Fitch Ratings or Baa3 or higher by Moody’s Investors Service) fixed-income securities denominated in 13 currencies. The index reflects reinvestment of all distributions and changes in market prices.

Consumer price indexes measure changes in the price level of a weighted-average market basket of consumer goods and services purchased by households. A consumer price index is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

The Personal Consumption Expenditures (PCE) Price Index measures the prices that consumers pay for goods and services to reveal underlying inflation trends. The Core PCE Price Index, the primary inflation monitor used by the Federal Reserve, excludes volatile food and energy prices.

A purchasing managers’ index (PMI) tracks the prevailing direction of economic trends in the manufacturing and service sectors.

The S&P 500 Index is a market-weighted index that tracks the performance of the 500 largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market.

The Flash UK Services PMI Business Activity Index measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction.

The S&P Global Eurozone Manufacturing PMI measures the activity level of purchasing managers in the manufacturing sector of the eurozone. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

The S&P Global Flash Eurozone Services PMI measures the activity level of purchasing managers in the services sector of the eurozone. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Important Information

Data refers to past performance. Past performance is not a reliable indicator of future results.

Investments in SEI Funds are generally medium- to long-term investments. The value of an investment and any income from it can go down as well as up. Investors may get back less than the original amount invested. Returns may increase or decrease as a result of currency fluctuations. 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.

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. Bonds and bond funds are subject to interest rate risk and will decline in value as interest rates rise. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments. Narrowly focused investments and smaller companies typically exhibit higher volatility. 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.

This information is issued by SEI Investments (Europe) Limited, 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR which is authorised and regulated by the Financial Conduct Authority.

SEI sources data directly from FactSet, Lipper, and BlackRock, unless otherwise stated.

The opinions and views in this commentary are of SEI only and should not be construed as investment advice.

Please refer to our latest Prospectus (which includes information in relation to the use of derivatives and the risks associated with the use of derivative instruments), Key Investor Information Document, Summary of UCITS Shareholder rights (which includes a summary of the rights that shareholders of our funds have) and the latest Annual or Semi-Annual Reports for more information on our funds, which can be located at Fund Documents. And you should read the terms and conditions contained in the Prospectus (including the risk factors) before making any investment decision.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the Strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. 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. There is no assurance as of the date of this material that the securities mentioned remain in or out of the SEI Strategies. Positioning and holdings are subject to change. All information as of 31 May 2022.

Information contained herein that is based on external sources or other sources is believed to be reliable, but is not guaranteed by SEI, and the information may be incomplete or may change without notice. This document may not be reproduced, distributed to another party or used for any other purpose.

There are risks involved with investing, including loss of principal. Diversification may not protect against market risk. There may be other holdings which are not discussed that may have additional specific risks. Narrowly focused investments and smaller companies typically exhibit higher volatility. 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. Emerging markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Bonds will decrease in value as interest rates rise. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments. SEI products 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.

The value of an investment and any income from it can go down as well as up. Investors may get back less than the original amount invested. Returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Investment may not be suitable for everyone. If you should have any doubt whether it is suitable for you, you should obtain expert advice.

Index returns are for illustrative purposes only, and do not represent actual account performance. Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.

Not all strategies discussed may be available for your investment.

This material is not directed to any persons where (by reason of that person’s nationality, residence or otherwise) the publication or availability of this material is prohibited. Persons in respect of whom such prohibitions apply must not rely on this information in any respect whatsoever.

The views and opinions within this document are of SEI only and are subject to change. They should not be construed as investment advice.

The SEI Global Assets Fund Plc, SEI Global Investments Fund Plc, and SEI Global Master Fund Plc (the “SEI UCITS Funds”) are structured as open-ended collective investment schemes and are authorised in Ireland by the Central Bank as a UCITS pursuant to the UCITS Regulations. The SEI UCITS Funds are managed by SEI Investments, Global Ltd (“SIGL”). SIGL has appointed SEI Investments (Europe) Ltd (“SIEL”) to provide general distribution services in relation to the SEI UCITS Funds either directly or through the appointment of other sub-distributors. The SEI UCITS Funds may not be marketed to the general public except in jurisdictions where the funds have been registered by the relevant regulator. The matrix of the SEI UCITS fund registrations can be found here seic. com/GlobalFundRegistrations.

No offer of any security is made hereby. Recipients of this information who intend to apply for shares in any SEI UCITS Fund are reminded that any such application may be made solely on the basis of the information contained in the Prospectus. Please refer to our latest Prospectus (which includes information in relation to the use of derivatives and the risks associated with the use of derivative instruments), Key Investor Information Document, Summary of UCITS Shareholder rights (which includes a summary of the rights that shareholders of our funds have) and the latest Annual or SemiAnnual Reports for more information on our funds, which can be located at Fund Documents.

SIEL has appointed SEI Investments (Asia) Limited (SEIAL) of Suite 904, The Hong Kong Club Building, 3 Jackson Road, Central, Hong Kong as the sub-distributor of the SEI UCITS funds. SEIAL is licensed for Type 4 and 9 regulated activities under the Securities and Futures Commission (“SFC”)

Singapore

The offer or invitation to subscribe for or purchase shares of the Sub-Funds (the “Shares), which is the subject of this Information Memorandum, is an exempt offer made only: (i) to “institutional investors” pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the “Act”), (ii) to “relevant persons” pursuant to Section 305(1) of the Act, (iii) to persons who meet the requirements of an offer made pursuant to Section 305(2) of the Act, or (iv) pursuant to, and in accordance with the conditions of, other applicable exemption provisions of the Act.

No exempt offer of the Shares for subscription or purchase (or invitation to subscribe for or purchase the Shares) may be made, and no document or other material (including this Information Memorandum) relating to the exempt offer of Shares may be circulated or distributed, whether directly or indirectly, to any person in Singapore except in accordance with the restrictions and conditions under the Act. By subscribing for Shares pursuant to the exempt offer under this Information Memorandum, you are required to comply with restrictions and conditions under the Act in relation to your offer, holding and subsequent transfer of Shares.

This information is being made available in Hong Kong by SEIAL. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

The SEI UCITS Funds have not been authorised by the SFC in Hong Kong and will be an unregulated collective investment scheme for the purpose of the Securities and Futures Ordinance of Hong Kong (the “SFO”). Shares of the SEI UCITS Funds may not be offered or sold by means of any document in Hong Kong other than (a) to professional investors as defined in the SFO and its subsidiary legislation or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (“CO”) or which do not constitute an offer to the public within the meaning of the CO. This document does not constitute an offer or invitation to the public in Hong Kong to acquire shares in the SEI UCITS Funds. These materials have not been delivered for registration to the Registrar of Companies in Hong Kong.

It is the responsibility of every recipient to understand and observe applicable regulations and requirements in their jurisdiction. This information is only directed at persons residing in jurisdictions where the SEI UCITS Funds are authorised for distribution or where no such authorisation is required.

The Shares may not be offered, sold or delivered directly or indirectly in the US or to or for the account or benefit of any US Person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and any applicable state laws.

This information is made available in Latin America FOR PROFESSIONAL (non-retail) USE ONLY by SIEL.

Any questions you may have in relation to its contents should solely be directed to your Distributor. If you do not know who your Distributor is, then you cannot rely on any part of this document in any respect whatsoever.

SEI has not considered the suitability or appropriateness of any of the SEI UCITS Funds against your individual needs and risk tolerance. SEI shall not be liable for, and accepts no liability for, the use or misuse of this document by the Distributor. For all Distributors of the SEI UCITS Funds please refer to your sub-distribution agreement with SIEL before forwarding this information to your clients. It is the responsibility of every recipient to understand and observe applicable regulations and requirements in their jurisdiction. The Distributor is, amongst other things, responsible for ensuring that the Shares are only offered, and any literature relating to the SEI UCITS Funds (including this document) are only distributed, in jurisdictions where such offer and/or distribution would be lawful.

Issued in South Africa by SEI Investments (South Africa) (Pty) Ltd. FSP No. 13186 which is a financial services provider authorised and regulated by the Financial Sector Conduct Authority (FSCA). Registered office: 3 Melrose Boulevard, 1st Floor, Melrose Arch 2196, Johannesburg, South Africa.

A number of sub-funds of the SEI Global Master Fund plc and the SEI Global Investment Fund plc (the “SEI UCITS Funds”) have been approved for distribution in South Africa under s.65 of the Collective Investment Schemes Control Act 2002 as foreign collective investment schemes in securities. If you are unsure at any time as to whether or not a portfolio of SEI is approved by the Financial Sector Conduct Authority (“FSCA”) for distribution in South Africa, please consult the FSCA’s website (www.fsca.co.za).

Collective Investment Schemes (CIS) are generally medium to long term investments and investors may not get back the amount invested. The value of participatory interests or the investment may go down as well as up. SEI does not provide any guarantee either with respect to the capital or the return of an SEI UCITS Fund. The SEI UCITS Funds are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available upon request from SEI. The SEI UCITS Funds invest in foreign securities. Please note that such investments may be accompanied by additional risks such as: potential constraints on liquidity and the repatriation of funds; macroeconomic, political/emerging markets, foreign currency risks, tax and settlement risks; and limits on the availability of market information.

This commentary is intended for information purposes only and the information in it does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Services Act.

Please refer to our latest Prospectus (which includes information in relation to the use of derivatives and the risks associated with the use of derivative instruments), Key Investor Information Document and the latest Annual or Semi-Annual Reports for more information on our funds, which can be located at Fund Documents.