SEI’s target strategic asset allocations are based on our long-term expectations for the global markets and are derived from our capital market assumptions. In the short-term, we may over- or underweight these positions as part of our tactical asset allocation, which aims to take advantage of short-term market opportunities.

The following change was made to the tactical asset allocations of the SEI Global Strategic Portfolios (the Funds) in the third quarter:

• Removed long high-yield bond/short emerging-market debt tilts in the Global Conservative and Global Moderate Funds to neutralise emerging-market debt exposure.

Rationale

• As global markets have recovered from their late-2018 lows, emerging-market debt (EMD) has outperformed most other fixed-income asset classes. Real yields in many emerging economies have declined over the past year1, making relative valuations among fixed-income markets appear more evenly balanced.
• While we still view the fundamental backdrop for emerging markets favourably, we expect EMD may have a bumpier ride than other fixed-income markets due to higher uncertainty around geopolitics and central-bank policies.
• Recent developments in the deepening US/China trade dispute—such as President Trump's recent threat of 10 percent tariffs on $300 billion of Chinese consumer goods, followed by the threat of an additional five percent levy on a wide range of imports from China on 23 August—have raised concerns about a slowing global economy. Continued unrest in Hong Kong has introduced additional uncertainty to the US/China relationship and, while a high-profile crackdown from the mainland is not our base case, such an event would be a clear negative for any trade resolution.
• The dramatic turn on the federal funds rate by the US Federal Reserve (Fed) has ushered in a global easing cycle as other central banks look to add stimulus. However, the degree of stimulus remains uncertain, not least in the US, where markets continue to price in ever more aggressive rate cuts. If the Fed disappoints, it could lead to US dollar strength. Or, if China allows further weakening of the yuan, it could put pressure on other EM currencies. Both scenarios would present a challenge for EM currencies and EMD performance.
• With the prospects for trade resolution unclear, our expectation is that EMD should see more volatility. Combined with a narrowing of relative valuations, we believe closing the Funds’ active overweights to EMD is warranted.

The following tables provide a comparison of the Funds’ target active weights relative to their strategic (long-term, neutral target) weights as at 30 September 2019:

Fund Risks
The investment risks described below are not exhaustive and potential investors should carefully review the Prospectus prior to investing. Diversification does not ensure a profit or guarantee against a loss. The risks described below may apply to the underlying assets of the products into which they invest.

• Investment in equity securities in general are subject to market risks that may cause their prices to fluctuate over time.
• Fixed-income securities are subject to credit risk and may also be subject to price volatility and may be sensitive to interest rate fluctuations.
• Absolute return investments utilise aggressive investment techniques which may increase the volatility of returns. If the correlation between absolute return investments and other asset classes within the fund increases, absolute return investments’ expected diversification benefits may be decreased.

 












Important Information

This document is for Professional Client use only. The SEI Global Strategic Portfolio Funds (the ‘Portfolio Funds’) have been registered for public distribution in the UK only. Documents related to the Portfolio Funds may not be supplied to the general public for purposes of a public offering in any other jurisdictions or be used in connection with any offer or subscription for sale to the public in such jurisdictions unless such offering or marketing is made in compliance with applicable exemptions for the private placement of collective investment schemes and any other applicable jurisdictional rules and regulations.

The Portfolio Funds may invest in a combination of other SEI and Third-Party Funds as well as in additional manager pools based on asset classes. These manager pools are separately managed by external Portfolio Managers and are monitored by SEI. One cannot directly invest in these manager pools.

SEI Investments (Europe) Limited (“SIEL”) acts as distributor of the Portfolio Funds. The Portfolio Funds are authorised in Ireland pursuant to the UCITS regulations and are incorporated as limited liability investment companies. The Portfolio Funds are managed by SEI Investments Global, Limited, an affiliate of the distributor. Any reference in this document to the Portfolio Funds is provided for information purposes only and should not be construed as investment or tax advice or as a recommendation to buy or sell these Funds or to engage in any related investment management services. Recipients of this information who intend to apply for shares in the Portfolio Funds are reminded that any such application must be made solely on the basis of the information contained in the prospectus (which includes a schedule of fees and charges). A copy of the prospectus, key investor information document (KIID) and latest annual/semi-annual reports for the Portfolio Funds can be obtained by contacting your SEI relationship manager or by using the contact details shown below.

The Portfolio Funds may invest substantially in other SEI Funds, Third-Party Funds and manager pools. The risks described below may apply to the underlying assets of the products into which they invest: Investments in equity securities in general are subject to market risks that may cause prices to fluctuate over time; fixed income securities are subject to credit risk and may also be subject to price volatility and may be sensitive to interest rate fluctuations; bonds or money market instruments are sensitive to inflation rate trends; Absolute return investments utilise aggressive investment techniques which may increase the volatility of returns. If the correlation between absolute return investments and other asset classes within the fund increases, absolute return investments’ expected diversification benefits may be decreased.

Data refers to past performance. Past performance is not a reliable indicator of future results. Investments in the Portfolio 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. Returns may increase or decrease as a result of currency fluctuations. Investors may get back less than the original amount invested. Derivative instruments may be used for hedging purposes and/or investment purposes. Any market commentary is an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events.

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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