Introducing SEI
Q209
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Potential Danger Signals in Your Portfolio
Yes
No
• Lack of clear investment policy (IPS)
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• Investments mismatched with objectives
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• Inappropriate level of risk
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• Lack of diversification
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• Under performing investments or managers
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• Style drift
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• Overlapping investments or management styles
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• Excessive expenses or trading activity
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• Lack of monitoring, adjusting, rebalancing
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• Unclear or untimely reporting
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• Lack of communication and service
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Cycle of Market Emotions
Who is SEI?
SEI Creates & Manages Wealth For Institutions and Private Clients
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A leading provider of Manager of Managers investment process, US$136 billion* assets under management globally
and $8 billion* in Canada
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Publicly held (Nasdaq: SEIC) global business solutions firm, with numerous offices worldwide
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Since 1968 we have helped institutions and individuals create and maintain wealth
* As of June 30, 2009.
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SEI’s Investment Philosophy
Objective:
Structured
Asset
Allocation
Achieve superior long-term investment
returns while managing risk
Efficient
Portfolio
Construction
Manager
Selection
Continuous
Portfolio
Monitoring
Asset allocation is the key determinant of performance
Portfolio structure is the key determinant of performance within each asset class
Specialist managers add value in their respective areas of expertise
Continuous monitoring of each manager’s daily trading is the only effective way to
control managers and maintain portfolio structure
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Proper Asset Allocation Diversifies Across Global Security Markets
International
Developed
Equities
Canadian
Equities
High
Yield
International
Fixed
Income
Emerging
Markets
Equity
Canadian
Fixed
Income
U.S.
Equities
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Why Diversify by Asset Class?
Performance of Various Asset Classes: 1993 to 2008
Annual Total Returns of Key Indices (Based on Sector)
The information seen is for illustrative purposes only and is not reflective of the performance of any SEI Funds. Past performance is no guarantee of future results.
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Why Diversify by Style?
Performance of Various Canadian Equity Investment Styles: 1999 to 2008
Annual Total Returns of Key Styles
Datasource: MSCI Barra.
This information is for illustrative purposes only and is not reflective of the performance of any SEI Funds. Performance is no guarantee of future results. Asset style
data shown is past performance of the following index returns. Large Cap Growth = MSCI Canada Large Growth , Large Cap Value = MSCI Canada Large Value,
Small Cap Growth = MSCI Canada Small Growth, Small Cap Value = MSCI Canada Small Value. One cannot invest directly in an index. Index returns do not
reflect the impact of management fees, transactions costs or expenses. Commissions, trailing commissions, management fees and expenses all may be associated
with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance
may not be repeated. The information contained herein is for general information purposes only and is not intended to constitute legal, tax, accounting, securities or
investment advice, nor an opinion regarding the appropriateness of any investment. You should not act or rely on the information contained herein without obtaining
specific legal, tax, accounting and investment advice from an investment professional.
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Your Optimal Asset Allocation
The Importance of Asset Classes
• How much in stock?
• How much in bonds?
Canadian vs. Foreign?
Stocks?
Cash?
• How much cash?
• How much in Canadian securities?
• How much foreign content?
Bonds?
Asset Allocation = Diversification = Lower Risk
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Asset Allocation Risk & Reward (using the U.S. markets as an example)
Annual Returns: 1926 – 2008 | Average Annual Inflation: 3.13%
Stocks – S&P 500 Index
Bonds – U.S. Intermediate Term Government Bonds
Cash – U.S. 30 Day Treasury Bill
Inflation – Consumer Price Index
Source – Ibbotson Associates
*Average Loss: the average loss when there is a negative return. **Average Gain: the average gain when there is a positive return.
Commissions, trailing commissions, management fees and expenses all may be associated with
mutual fund investments. Please read the prospectus of the SEI fund before investing. Mutual fund
securities are not covered by the Canada Deposit Insurance Corporation or any other government
deposit insurer. Mutual funds are not guaranteed, their values change frequently and past
performances may not be repeated.
The information presented is past performance and in U.S. dollars. Past performance is no guarantee
of future return. Investment return and principal value of a mutual fund investment will fluctuate so that
an investor’s shares on redemption may be worth more or less than the original cost.
In addition to the normal risks associated with equity investing, narrowly focused investments and
investments in smaller companies typically exhibit higher volatility. International investments may
involve risk of capital loss from unfavourable fluctuations in currency values, from difference in
generally accepted accounting principles or from economic or political instability in other nations.
The indices illustrated herein are unmanaged indices. You cannot invest in an index. Index returns do
not reflect the impact of any management fees, transaction costs or expenses. The index information
seen here is for illustrative purposes only. This piece is provided by SEI Investments Canada
Company.
This is not indicative of any specific investment. It is an illustration of how a certain profile may have
performed using the past performance of the indices listed.
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Canadian Equity Structure
As of July 2009
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Canadian Fixed Income Fund
As of July 2009.
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Balanced 60/40 Strategy
As of May 2009
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Manager Discovery: Casting a Wide Net
19,000 Managers in initial
universe
3,000 Managers remain after
initial fundamental screen
1,000 managers
remain after
qualitative screen
• Client and portfolio objective drive
manager discovery
• Seek opportunities and inefficiencies
in the market place
• Reputation leads to many firms
visiting SEI’s offices each year
• Focused research - no legal requirements
to have opinion on many firms
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Breadth of research allows us
“first mover” advantage
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Global presence and industry experience
45 managers remain
for further analysis
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Our Monitoring Process is Rigorous and Dynamic
Daily
Daily trade oversight
Weekly
Monthly
Performance attribution
Performance attribution
Review of buys & sells
Review of buys & sells
Additional Monitoring
• Ongoing dialogue with managers
• Onsite visits
• Risk management
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SEI’s Sell Discipline: Leading vs. Lagging Indicators
Manager Turnover
Reasons for sell decision
Organization
Better Ideas
Organization
Stability, liquidity event, etc.
Investment team
Turnover, generational transition
Structural Change in Market
Investment process no longer effective
Process
Inability to exploit inefficiencies, asset growth
Better Ideas
Discovered higher quality manager
Team
Process
Structural
Advantages of SEI’s Sell Discipline
• Decision speed
• Back-up managers
• Market and industry analysis
Manager Addition Example:
• March 2009: Artisan Partners LP is added to Emerging
Markets Equity Fund. Artisan seeks to identify emerging
market companies that are positioned to benefit from that
growth potential and possess a sustainable global
competitive advantage.
Manager Termination Example:
• May 2009: AllianceBernstein is terminated from U.S. Large
Company Equity and EAFE Equity Funds due to
uncertainty over the firm’s leadership.
Note: Graphic is an approximation based on historic manager changes made by SEI.
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Automatic Portfolio Rebalancing
Equities
60%
Current
Asset
Allocation
Cash
10%
Fixed
Income
30%
Equities
50%
Target
Asset
Allocation
Rebalancing ensures that your
recommended asset mix is
constantly in place.
Rebalancing reduces unintended
and unnecessary risk keeping
your portfolio on the right course.
Cash
5%
Fixed Income
45%
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SEI’s Asset Management Philosophy
Successful active management is dependent on understanding drivers of
return
• Identification of market inefficiencies improves probability of success
• A robust and well resourced evaluation process identifies talented managers
• Diversification of investment processes to enhance alpha
Managers and portfolios must be managed—continuously—to achieve
success
• Manager’s portfolio should be tracked daily, weekly, monthly, quarterly and
annually
• Comprehensive research and monitoring ensures quality managers are
maintained
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Representative Canadian Institutional Client List
• AGC Flat Glass North America Ltd
Concord, ON
• Northern Cancer Research Foundation
Sudbury, ON
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• Northern Development Initiative Trust
Prince George, BC
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• Health Services Foundation of the
South Shore
Bridgewater, NS
Bell Aliant Regional Communications
Saint John, NB
• Hitachi Construction Truck
Manufacturing Ltd.
Blount Canada Ltd.
Guelph, ON
Guelph, ON
Brewster Transport Company Limited • HSBC Financial Corporation Limited
Toronto, ON
Banff, AB
• Ideal Roofing Co. Ltd.
BMO Nesbitt Burns
Ottawa, ON
Toronto, ON
• Brink’s Canada Limited
Toronto, ON
• Diamond Foundation
Vancouver, BC
• Diocese of London
London, ON
• Falconbridge Limited
Toronto, ON
• Givaudan Canada Co.
Mississagua, ON
• Jewish Community Foundation of
Montreal
Montreal, QC
• Lafarge Canada Inc.
Concord, ON
• Laurentian University of Sudbury
Sudbury, ON
• Linde Canada Limited
Mississauga, ON
• Mercedes-Benz Canada Inc.
Toronto, ON
• Paramount Pictures Entertainment
Canada
Toronto, ON
• Peerless Clothing Inc.
Montreal, QC
• Reitmans (Canada) Limited
Montreal, QC
• Ryerson Canada, Inc.
Etobicoke, ON
• Sir Mortimer B. Davis Jewish General
Hospital
Montreal, QC
• Smucker Foods of Canada Co.
Markham, ON
• St. Peter’s Seminary Foundation
London, ON
• Wabush Mines
Cleveland, OH
Representative clients are selected by SEI to illustrate a sampling of SEI’s current client base, but may not necessarily endorse all of the services provided by SEI. List as of June 30,
2009.
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Representative US Corporate Institutional Client List
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Ahlstrom USA
(Windsor Locks, CT)
Alfa Insurance Companies
(Montgomery, AL)
American Commercial Lines LLC
(Jeffersonville, IN)
AT&T Inc.
(San Antonio, TX)
Brink’s Company
(Richmond, VA)
Butler Manufacturing Company
Kansas City, MO
California Casualty Management
Co.
(San Mateo, CA)
C & D Technologies, Inc.
(Blue Bell, PA)
Clarks Companies, N.A.
(Boston, MA)
Cliffs Natural Resources Inc.
(Cleveland, OH)
Comcast Corporation
(Philadelphia, PA)
CommScope
(Hickory, NC)
CoorsTek, Inc.
(Golden, CO)
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Covidien
(Mansfield, MA)
Deloitte, LLP
(New York, NY)
Ecolab, Inc.
St. Paul, MN
Elkem Metals Inc.
(Pittsburgh, PA)
ESSROC Italcementi Group
(Nazareth, PA)
Givaudan Corporation
(Cincinnati, OH)
Intelsat Global Services Corp.
(Washington, DC)
Jervis B. Webb Co.
(Farmington Hills, MI)
JM Smucker Company
(Orrville, OH)
Joy Global, Inc.
(Milwaukee, WI)
Lafarge NA, Inc.
(Herndon, VA)
LVMH Moet Hennessy Louis
Vuitton
(New York, NY)
Marine Corps Community
Services
(Quantico, VA)
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Milacron Inc.
(Batavia, OH)
Mitsubishi Motors North
America, Inc.
Cypress, CA
Nalco Holding Company
(Naperville, IL)
Nashville Electric Services
(Nashville, TN)
National Services Industries,
Inc.
(Atlanta, GA)
Panasonic Corporation
(Secaucus, NJ)
Pearson, Inc.
(New York, NY)
Pliant Corporation
(Schaumburg, IL)
Qantas Airways Ltd.
(Los Angeles, CA)
Ryerson
(Chicago, IL)
SAP America Inc.
(Newtown Square, PA)
Teleflex
(Limerick, PA)
The Clearing House
(New York, NY)
Viacom International Inc.
(New York, NY)
Representative clients are selected by SEI to illustrate a sampling of SEI’s current client base, but may not necessarily endorse all of the services provided by SEI. List as of June 30, 2009.
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Representative Global Institutional Client List
Hong Kong
UK
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Brinks Limited
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American Club Hong Kong
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Hong Kong Jockey Club
Cardiff
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Hong Kong Housing Society
Habitat UK Ltd.
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Shui On Investment Company
Bushey
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Hong Kong Electric Holdings
London
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DeLaval
Limited
Hercules, Inc. (UK)
Wilmington, DE
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Continental Europe
Higgins Group
Loughton
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Monarch Airlines
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Luton
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Nynas UK Ltd.
Roche Ireland Ltd.
Dublin
Meubel
Amsterdam
Cheshire
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Phoenix Dunlop Oil & Marine
Grimsby
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Twyford Bathrooms Ltd.
Stoke-on-Trent
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South Africa
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Old Mutual Symmetry
Cape Town
University of Bristol
Bristol
Representative clients are selected by SEI to illustrate a sampling of SEI’s current client base, but may not necessarily endorse all of the services provided by SEI. List as of June 30, 2009.
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Disclosures
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For more information about the SEI funds, please consult with your investment professional. The prospectus and other
important information relating to the SEI funds can be found at www.seic.com or www.sedar.com.
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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
Please read the prospectus of the SEI fund before investing in them. Mutual fund securities are not covered by the Canada
Deposit Insurance Corporation or any other government deposit insurer. Mutual funds are not guaranteed, their values
change frequently and past performances may not be repeated.
•
SEI Investments Canada Company, a wholly owned subsidiary of SEI Investments Company, is the Manager of the SEI
Funds in Canada
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Material that discusses the SEI funds and index returns, represent an assessment at a specific point in time and is not
intended to be a forecast of future events, or a guarantee of future results. You cannot invest in an index. Index returns do
not reflect the impact of any management fees, transaction costs or expenses. The index information presented is for
illustrative purposes only, and is not reflective of the performance of specific SEI Funds.
•
Except as otherwise noted, the rates of return shown are the historical annual compounded total returns including changes in
unit value and reinvestment of all distributions. The rates of return shown for periods of less than one year are simple rates
of return. Rates of return do not take into account sales, redemption, distribution or optional charges or income taxes
payable by any security holder that would have reduced returns.
•
The information contained herein is for general information purposes only and is not intended to constitute legal, tax,
accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment. You should not
act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an
investment professional.
•
Information from external sources is believed to be reliable but no representation is made to its accuracy.
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