Advisor Flipbooks

2024 SEI ® Data as of 12/31/2023 unless otherwise indicated. 2 Although they lagged behind U.S. large-cap stocks by a significant amount, international stocks still achieved a respectable performance in 2023, gaining 17.9%, as measured by the MSCI World ex USA Total Return Index. U.S. small caps also came on strong in December, ending the year with a total return of 16.8%, as measured by the Russell 2000 Index. Emerging-market equities advanced a solid 9.8% in 2023, clawing back just half the sharp decline in 2022. Fixed-income markets saw mixed performance in 2023. Long-duration bonds posted a 6.6% total return, as measured by the Bloomberg Long Government/Credit Index, following 2022's extraordinarily sharp 27.2% loss. U.S. investment-grade corporate bonds, as represented by the Bloomberg US Corporate Investment Grade Index, gained 5.5%, but high-yield bonds posted a strong 13.5% total return, as measured by the Bloomberg US Corporate High Yield Bond Index. The worst performing asset class in 2023 in the group we highlight was commodities—down 8.4% after being up nearly 19% in 2022, as measured by the Bloomberg Commodity Total Return Index. The conflict in the Ukraine was not enough to keep energy and grain prices at the lofty levels they attained in the immediate aftermath of the Russian invasion in early 2022. A massive infrastructure program in Germany that enhanced the country's ability to import and process liquefied natural gas from the U.S., Qatar, and elsewhere took the risk premium out of the energy sector. The stalemate in the Ukraine conflict and a sharp rise in U.S. energy output all helped to deflate prices. China's surprisingly slow rebound out of COVID also had a negative impact on energy prices and on a broad selection of industrial metals and agricultural products. The year that was, the year that might be Exhibit 2 provides a stylized depiction of SEI's 2023 and 2024 views on several key economic data points and policy issues. Our original forecasts for 2023, made at the end of 2022, are represented by the boxes in the top bars for each category; the actual outcomes are represented by checkmarks. To be sure, this is not a quantitative exercise. Rather, it is meant to illustrate the degree to which our expectations for 2023 proved to be accurate. Exhibit 2: What we expected, what happened, and what might happen Source: SEI. For illustrative purposes only. Looking first at economic growth, we argued at the start of the year that many developed countries would face economic stagnation and recessionary conditions in 2023, but the U.S. would not necessarily be one of them. It appears that we were mostly on the mark with that forecast, as indicated in Exhibit 3. Among the seven largest developed economies, the U.S. was the standout Area Bearish Neutral Bullish Contractionary Expansionary -- 2023 o P 2024 o Weak Strong -- 2023 R 2024 o Volatile Stable -- 2023 o P 2024 o Tight Loose -- 2023 R 2024 o Contractionary Expansionary -- 2023 o P 2024 o High Low -- 2023 o P 2024 o Excess optimism Excess pessimism -- 2023 R 2024 o o = What we expect(ed) at the start of the year -- P = What happened over the full year R = Similar expectation and outcome Economic growth Labor markets Investor sentiment Legend Monetary policy Fiscal policy Geopolitical risk Inflation

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