Introducing SEI Q408
SEI – Since 1968 SEI Creates & Manages Wealth For Institutions and Private Clients • A leading provider of Manager of Managers investment process, US$134 billion* assets under managementglobally and $7.5 billion* in Canada • Provider of mutual fund wrap programs offered through independent, investment advisors • Publicly held (Nasdaq: SEIC) global business solutions firm, with more than 20 offices in over a dozen countries • Since 1968 we have helped institutions and individuals create and maintain wealth * As of Dec 31, 2008.
SEI Advisor Network Solutions – Benefits to Your Client • Client/Advisor Relationship In Complete “Alignment” • Enhances the perceived value to your client as an objective, comprehensive consultant • Professionalism - “advisor vs. salesperson” • Allows you to increase the scope of your relationship by taking a broader look at their finances beyond the portfolio you manage • Today’s consumers want and expect this • Better Value • Costs aligned with client success – no sales commission • One program, many services (asset allocation, manager selection/monitoring) • Objective, holistic advice • All of client’s assets “at work” for them on Day 1
How Are Average Financial Advisors Doing? • Growing revenue, but… • Struggling to manage overhead and profitability • Struggling to define service model • Struggling to define an operational model Where Advisors Spend Their Time Source: Advisor Impact Client Audit (US) / Moss Adams LLP (US)
Your Basic Challenge • Marketing and Sales • New Business Acquisition • Determining Objectives • Servicing/Education Marketing Reporting and Operations Client Services • Asset Allocation • Manager Selection • Monitoring Managers • Portfolio Rebalancing • Reporting and Operations Asset Management
Potential Danger Signals in Your Portfolio Yes No • Lack of clear investment policy (IPS) • Investments mismatched with objectives • Inappropriate level of risk • Lack of diversification • Under performing investments or managers • Style drift • Overlapping investments or management styles • Excessive expenses or trading activity • Lack of monitoring, adjusting, rebalancing • Unclear or untimely reporting • Lack of communication and service
S&P/TSX Bull & Bear Markets (1957-2008) Past performance is no guarantee of future results. The index illustrated is an unmanaged index. You cannot invest directly in an Index. Index returns do not reflect the impact of any management fees, transactions costs or expenses.
Proper Asset Allocation Diversifies Across Global Security Markets International Developed Equities High Yield International Fixed Income Canadian FixedIncome Canadian Equities Emerging Markets Equity Emerging Markets Debt
Asset Allocation Risk & Reward Annual Returns: 1980 – 2007 | Average Annual Inflation: 3.64%
U.S. Asset Allocation Risk & Reward 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.
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.
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.
Your Optimal Asset Allocation • How much in stock? • How much in bonds? • How much cash? • How much in Canadian securities? • How much foreign content? The Importance of Asset Classes Canadian vs. Foreign? Stocks? Cash? Bonds? Asset Allocation = Diversification = Lower Risk
Institutional Investors Consider both return and risk Invest long term Use professional managers Have a portfolio Diversify Use a scientific process Retail Vs. Institutional? Retail Investors • Chase return • Buy/sell short-term • Make decisions themselves • Have individual positions • Concentrate • Act on emotion
SEI Managed Process Planning Process A Scientific Approach to Disciplined Investing Establishes Goals Sets Risk Limits Custom Portfolio Sets Long Term Target Sets Short Term Limits Manager Selection Low Cost Vehicle Specialist Managers Rebalancing Reallocation Maintains Objectives Monitoring and Reporting Keeps YouInformed and On Track
Mutual Funds vs. SEI… Represents a Difference From Regular Mutual Funds • SEI Manager of Managers • Customized asset management from the world’s leading money managers • Combining multiple managers intelligently with less risk • Strict monitoring of each manager Regular Mutual Funds • Intensely marketed products • Good managers go bad • Star managers move • DSC fees lock people in • Mutual fund portfolios become unbalanced and too risky
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 SEI’s Investment Philosophy Objective: Achieve superior long-term investment returns while managing risk Efficient Portfolio Construction Structured Asset Allocation Continuous Portfolio Monitoring Manager Selection
SEI’s Investment Management Unit:Leveraging Global Coverage Client Portfolio Management Portfolio Strategy Global Investment Strategy Fundamental Research | Quantitative Research Global Fixed Income Non-Directional Strategies GlobalEquity Global PrivateMarkets Execution and Operations United Kingdom Canada United States (Oaks-Corporate HQ) Hong Kong South Africa *As of 12/31/07
Manager Discovery: Casting a Wide Net • 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 • Breadth of research allows us “first mover” advantage • Global presence and industry experience 19,000 Managers in initial universe 3,000 Managers remain after initial fundamental screen 1,000 managers remain after qualitative screen 45 managers remain for further analysis
Additional Monitoring Ongoing dialogue with managers Onsite annual visits Risk management Our Monitoring Process is Rigorous and Dynamic Daily Weekly Monthly • Performance attribution • Review of buys & sells Daily trade oversight Performance attribution Review of buys & sells
SEI’s manager replacement strategies are more efficient SEI’s Manager change capabilities timeline based on representative data compiled from past manager transitions. Manager transition timelines will vary depending on circumstances.
Monitoring as an effective sell discipline:Focus on leading vs. lagging indicators • Advantages of SEI’s sell discipline • Decision speed • Back-up managers • Market and industry analysis
Canadian Equity Structure As of July 2008
SEI’s Manager of Managers structure covers the market Example: Unbundled Equity Approach Example: SEI Canadian Equity Fund GOODMAN Earnings Anticipation HIGHSTREET Earnings Momentum SIONNA Relative Value PCJLarge CapMarket Driven JARISLOWSKYFRASER Deep Value Equity Value Equity Growth MFC GLOBAL Disciplined Core MONTRUSCO Earnings Growth Source: SEI Research
SMAs vs. SEI Investment SolutionsBesides increased visibility on client statements, what do SMAs offer investors? SEI Portfolio provide diversification, access to numerous portfolio managers and $5,000 minimum investments Sample Canadian Equity Strategy SEI Canadian Equity Strategy McLean Budden Core Barclays Capped Active Value Growth Value Growth
Canadian Equity Market Investing (1999 – 2008) Style indices returns are courtesy of BARRA Consulting. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. 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. Mutual funds are not guaranteed, their values change frequently and past performances may be repeated. Index performance returns do not reflect any management fees, transaction costs or expanses. One cannot invest directly in an index. Past performance does not guarantee future results.
SEI Balanced 60/40 Strategy As of October 2008
Automatic Portfolio Rebalancing • Rebalancing ensures that your recommended asset mix is constantly in place. • Rebalancing reduces unintended and unnecessary risk keeping your portfolio on the right course. Equities Cash 60% CurrentAssetAllocation 10% Fixed Income 30% Cash 5% Equities TargetAssetAllocation 50% Fixed Income 45%
SEI’s Proven 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 enhances 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
SEI Sales Support Monthly Performance Reports End Investor Materials Website Support Quarterly Reporting Quarterly Advisor Newsletter Market Commentary
Representative Canadian Institutional Client List • AGC Flat Glass North America LtdConcord, ON • Bell Aliant Regional CommunicationsSaint John, NB • Blount Canada Ltd.Guelph, ON • Brewster Transport Company LimitedBanff, AB • BMO Nesbitt BurnsToronto, ON • Brink’s Canada LimitedToronto, ON • Diamond FoundationVancouver, BC • Diocese of LondonLondon, ON • Falconbridge LimitedToronto, ON • Givaudan Canada Co.Mississagua, ON • Health Services Foundation of the South ShoreBridgewater, NS • Hitachi Construction TruckManufacturing Ltd.Guelph, ON • HSBC Financial Corporation LimitedToronto, ON • Ideal Roofing Co. Ltd.Ottawa, ON • Jewish Community Foundation of MontrealMontreal, QC • Lafarge Canada Inc.Concord, ON • Laurentian University of SudburySudbury, ON • Linde Canada LimitedMississauga, ON • Mercedes-Benz Canada Inc.Toronto, ON • Northern Cancer Research FoundationSudbury, ON • Northern Development Initiative TrustPrince George, BC • Paramount Pictures Entertainment Canada • Toronto, ON • Peerless Clothing Inc.Montreal, QC • Reitmans (Canada) LimitedMontreal, QC • Ryerson Canada, Inc.Etobicoke, ON • Sir Mortimer B. Davis Jewish General HospitalMontreal, QC • Smucker Foods of Canada Co. • Markham, ON • St. Peter’s Seminary FoundationLondon, 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 December 31, 2008.
Representative US Corporate Institutional Client List • Covidien • (Mansfield, MA) • Deloitte, LLP • (New York, NY) • Elkem Metals Inc. • (Pittsburgh, PA) • ESSROC Italcementi Group • (Nazareth, PA) • FLSmidth Inc. • (Bethlehem, 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) • 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 Co. • Kansas City, MO • California Casualty Management Co. • (San Mateo, CA) • Carlisle Companies Inc. • (Charlotte, NC) • 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) • Milacron Inc. • (Batavia, OH) • 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) • Unilever Best Foods, Inc.(Englewood Cliffs, NJ) • 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 December 31, 2008.
Representative Global Institutional Client List Hong Kong UK • Hercules, Inc. (UK) • Wilmington, DE • Diamond Trading CompanyLondon • Brinks Limited • London • DeLaval • Cardiff • Higgins Group • Loughton • Monarch Airlines • Luton • Phoenix Dunlop Oil & MarineGrimsby • Twyford Bathrooms Ltd. • Stoke-on-Trent • University of BristolBristol • American Club Hong Kong • Hong Kong Jockey Club • Hong Kong Housing Society • Shui On Investment Company • Hong Kong Electric Holdings Limited Continental Europe • Roche Ireland Ltd. • Dublin • Meubel • Amsterdam South Africa • Old Mutual Symmetry • Cape Town • Grant ThorntonJohannesburg 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 December 31, 2008.
Disclosures • 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. • 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. • For those SEI funds which employ the 'manager-of-managers' structure, SEI Investments Canada Company has ultimate responsibility for the investment performance of the fund due to its responsibility to oversee the sub-advisors and recommend their hiring, termination and replacement. • 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.