Strengthening global economic data, particularly in leading indicators, deliver a strong ‘risk-on’ environment in Q3 2017

Executive Summary

• Global fixed income yields delivered mixed results over the quarter, while global equities markets advanced given a general risk-on environment. Emerging markets continued to lead global markets across fixed income and equities, supporting the strategic allocations to these asset classes across the SEI Strategic Portfolios.
• Credit spreads continued to grind tighter, supporting general overweight positions in credit and economically-sensitive debt across the SIS programme. Longer duration bonds generally outperformed in price terms, most specifically in the US, supporting yield curve flattener positions but detracting from a general duration underweight.
• The Stability-Focused Strategic Portfolios (the Defensive, Conservative, and Moderate Funds, collectively “the Funds”, Sterling Wealth A share class, in GBP, net of all fees) returns ranged between 0.10% and 0.47% in Q3 2017, comparing favourably to the -0.22% BofA Merrill Lynch Sterling Broad Market index over the same time period, which can be seen as a representation of the UK fixed income market.
• SEI manages the Stability-Focused Strategic Portfolios to specific maximum drawdown targets which tend to result in an asset allocation structure that seeks to deliver a smoother investment journey for investors.  Evidence of the success of this approach can be found in the 5-year volatility data of the Stability Focused Strategic Portfolios, with respective values of 1.71%, 2.84%, 4.07% for the Defensive, Conservative, and Moderate Funds, again comparing favourably against the fixed-income only BofA Merrill Lynch Sterling Broad Market index volatility number of 5.11%. On this basis, the Stability-Focused Strategic Portfolios continue to deliver highly competitive risk-adjusted returns.