SEI investments

[WM]

Has anyone heard of or dealt with an investment company called SEI?

My brother-in-law moved out of mututal funds (don't know what kind) this summer and is now investing most of his non-ira funds with them. He has gotten very good returns, so is very happy with them, but the fees are very high -> 1-1.2% of your holdings with them annually if you've got less than 500K.

Their website (seic.com) is not especially informative, but from what he told me, their line is that getting consistently good returns is all about asset allocation. So you tell them when you want to retire and decide on a risk tolerance and then they slot you into the appropriate investment categories. Main categories are US stocks, US bonds, International stock, International bonds and cash, with sub-categories and sub-sub-categories down from there.

The way he explained it, they are looking for managers who can meet appropriate target returns in each category, not necessarily the highest returns. They evaluate managers quarterly and get rid of them if they're not meeting the targets.

He and his wife chose the second-highest risk category, which aims for an overall return of 9.9% over 10 years. The highest-risk category aims for something like 10.1%, he thought. Not sure about the lower levels. One question - isn't this what the stock market has averaged overall? But probably not over all 10-year periods.

He likes it because he can put his money there and forget about it, and everything is in one place. And his returns have been great - 125K grew to 200K in about 6-7 months. Which of course makes me wonder what his allocation is, and I can call him this weekend and ask him some more about that.

I am very skeptical of anything with such high fees, so I'm not planning on abandoning our buy-and-hold index fund strategy, but who are these guys?

 

[saluki9]

SEI is a company based in Oaks PA. The manage around $130B (or around there) SEI made their name in the trust business in that they produce the software that the vast majority of banks use for their own internal accounting.

Through aquisitions they got into the money management business at first on the pension side. They manage the DB & DC pensions for many fortune 500 companies. They also developed their own model for managing money. Other than laddered FI they don't run any of their own money. They have a team that evaluates third party money managers and then SEI turns that into a wrap for individuals. They also run a managed account platform with the same managers for larger accounts.

They do not take money directly. The only way to access them is through a registered investment adviser. Te expenses can be a little higher because you have the manager fee + SEI's fee + the advisor fee. They do have a central focus on asset allocation, then on manager selection.

On top of all of this, better than investing with them was investing IN them. for the 1980's 1990's and early 2000's the stock (Symbol SEIC) was one of the best performing public companies on many lists.

This story is a little old, but it tells you about the company http://www.fastcompany.com/online/14/totalteamwork.html

Almost forgot... SEI also does a lot of back office reporting and settlement for mutual funds. I think they do it for almost 2 TRILLION dollars of mutual fund and ETF money. They do the back office, settlement, and reporting for all of the Ishares ETFs

 

[WM]

Thanks for the great info!

I talked to him some more and found that I'd misunderstood about the amounts and his returns. He still calculated his return at around 18%, but on his statement it says he was getting 11%. So I'm assuming the statement is correct, and between his fuzzy math and the fees he's paying, the returns are average.

The conversation did motivate me to go back to Paul Merriman's book and look more carefully about diversifying, which I could be doing more of.

 

[2B]

Paying high fees utlimately only helps the advisor.

Unfortunately, it's hard to convince people who have been "sold."

 

[chinaco]

I used to hold the PBHG Growth fund in an IRA. I canned it when they got caught up in the market timing scandal with other Mutual Fund companies. By the way Gary Pilgrim step down from PBHG and was in legal trouble. The PBHG family of funds were purchased by another company and no longer exists.

Anyway... I can remember SEI being listed in the statements I would recieve from PBHG. I think they were a sub-advisor or had some other type of relationship with PBHG.

 

[saluki9]

Anyway... I can remember SEI being listed in the statements I would recieve from PBHG. I think they were a sub-advisor or had some other type of relationship with PBHG.

SEI is very tightly wrapped around many areas of the investment business. They probably were not a sub advisor, more than likely they did the back office work for the fund. They run the cash ops and lock boxes for many fund families.