Issue link: https://info.seic.com/i/1540523
Hot Topics. Resiliency: A New Economic Landscape Despite geopolitical and monetary uncertainty, Q3 markets defied the noise; proving resilient amidst fresh trade disruptions, cautious central bank pivots and weaker economic data. Why does it matter? Equities reached new highs in Q3, amidst trade uncertainty, accelerating Artificial Intelligence investments, and a Federal Reserve rate cut. U.S. large-cap technology stocks continued to lead, fuelled by AI-driven spending. However, the rally broadened, with small caps surging after the Fed's rate cut. Emerging markets gained traction, driven by renewed optimism in U.S.-China trade talks and growing AI investment across Asia. Gold also hit fresh record highs, reflecting investor demand for safe-haven assets amid geopolitical tensions. What are SEI doing? We remain strategically committed to global diversification within equities across geographies and market capitalisations to deliver consistency throughout various market cycles. Active management continues to underpin our approach, especially given historically high levels of market concentration risk in the U.S. While we continue to monitor key risks including trade policy and inflation dynamics, our long-term strategy remains designed for resilience across a range of scenarios. Diversification across fixed income and exposure to our Global Managed Volatility fund aims to minimise downside risk throughout market cycles and during periods of market volatility. It Takes Trump to Tango Tariff uncertainty persisted throughout Q3 2025, reshaping global trade expectations and investor positioning. Why does it matter? Following the initial shock of Q2's tariff announcements, Q3 saw tense negotiations and deepening legal uncertainty. The U.S. continued trade talks with key partners, while retaliatory tariffs from other nations began to take effect. With the outcome still pending, investors are watching closely for signs of resolution or further negotiations as Q4 begins. What are SEI doing? We believe that in an environment of rising market volatility and uncertainty, commitment to global diversification is more important than ever. Exposure to inflation-sensitive assets, such as commodities and inflation-linked bonds, helps reinforce portfolio resilience during periods of price instability. Our investment decisions remain grounded in bottom-up fundamentals, allowing us to focus on long-term value rather than short-term noise. Michael Allen Senior Portfolio Strategist at SEI shares his views on the topics that investors should look out for in the year to come. Central Banks: A Tale of Diverging Rate Paths The Federal Reserve cut rates for the first time since January 2024, while the ECB continued its easing cycle and the BOE held firm amidst persistent inflation. Why does it matter? The Fed's September rate cut marked a pivotal shift in U.S. monetary policy, driven not by falling inflation, but by signs of a cooling labour market. In contrast, the ECB has now delivered eight rate cuts since June 2024, citing stabilised inflation and sluggish growth. Meanwhile, the BOE remains in a holding pattern, constrained by inflation still well above target. With central banks responding to local conditions rather than global trends, the era of synchronised monetary policy appears to be behind us. What are SEI doing? T h o u g h o u r s t r a t e g i c g l o b a l diversification allows us to balance geopolitical risks and opportunities, we are tactically positioned for further divergence across central banks. Our investment team actively monitors central bank signals, inflation trends, and labour market data, using these insights to guide tactical adjustments. While policy paths diverge, our focus remains on staying agile and grounded in fundamentals. These are the views and opinions of SEI which are subject to change. They should not be construed as investment advice. 9