Sei citywire jan_2013

Goals Based Investing Managing Investor Behaviour in times of Market Volatility

January 2013

Agenda

2

• An Introduction to SEI

• Market challenges & goals based investing

• Active Management in times of market volatility

For Professional Client Use Only – Not for Distribution to Retail Clients

SEI corporate profile

3

*As of September 30, 2012. Currency calculated September 30, 2012, with an exchange rate of 1 USD to 0.6188 GBP

Representative clients are selected by SEI to illustrate a sampling of SEI’s client base, but may not necessarily endorse all of the services provided by SEI.

Representative Global Clients*

Manages £120 billion in assets

Administers £156 billion in client

assets

Processes 1.5 million end-investor

accounts as of December 2011

Offices in the United States, Canada,

United Kingdom, Ireland, the

Netherlands, Hong Kong, South Africa,

South Korea and Dubai

SEI is a publicly traded company listed

on NASDAQ with approximately 2,500

employees worldwide

SEI Key Facts*


Asset Management

Administration

Value to end client

What do your clients value most?

Expertise or Strength

SEI

Expertise

Asset Allocation

Advice

Your

Expertise

4 For Professional Client Use Only – Not for Distribution to Retail Clients

Valu

e

Volatility: Elevated levels

4 7

18 25 27

101

0

20

40

60

80

100

120

1951-1960* 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010

NUMBER OF 3% DAILY S&P 500 MOVES BY DECADE


*S&P 90 is used as the stock market index before the S&P 500 inception in 1957.

Source: SEI

Returns calculated in USD. Volatility in other markets may vary.

Irrational decisions | Buy high and sell low

Market volatility leads to fear and greed

6

Sources: Morningstar, Inc., MSN Money, Yahoo Finance. Currency converted from USD to GBP on 10/8/2012 at 0.64050 British Pound per 1.00000 USD. Net flows and

total returns as of December of each year.

-4000

-2000

0

2000

4000

6000

8000

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mu

tual F

un

d N

et

Sale

s i

n £

millio

ns

Total Global Funds ex Money Market Estimated Net Flow

Mutual Fund Sales

(net sales

£ billion)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(£45.0) (£258) £148 £160 £232 £263 £506 £383 £293 (£368) £472 £398 (£42.4)

FT

SE

100 L

evel

Mutual Fund Net Sales

FTSE 100 Level


Index2.12%

Index

7.84%

Average Investor

-5.73%

Average Investor

1.34%

Average Investor-1.27%

-8%

-4%

0%

4%

8%

Equity Fixed Income Asset Allocation

Re

turn

sIrrational decisions can lead to inferior returns


Source: Dalbar, March 2012. Time period: one year returns for 2011. Shown in USD. The U.S. equity index is represented by S&P 500 Index, the U.S.

fixed income index by Barclays Aggregate Bond Index. Average U.S. equity investor, average U.S. fixed income investor, and average U.S. Asset

allocation investor results are calculated using data supplied by the Investment Company Institute. Investor returns are represented by the change in

total U.S. mutual fund assets after excluding sales, redemption, and exchanges. This method of calculation captures realised and unrealised capital

gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. Total return rate is determined by calculating the investor

return dollars as a percentage of the net of the sales, redemptions and exchanges for each period. Past performance does not guarantee future results.

Implementing traditional wealth management

Define and Prioritise

Goals

Establish Risk

Measures

Identify an Investment

Strategy

Major purchase

next year

Education

beginning in four

years

Retirement in

20 years

Blended Risk

Tolerance

Blended

Portfolio


Implementing goals-based investments | Multiple portfolios

9

For illustrative purposes only. Individual circumstances may vary.

Risk Tolerance assessment takes account of factors such as age, time horizon, and capacity for loss.

Define and Prioritise

Goals

Establish Risk

Measures to Each

Goal

Identify Best Strategy for

Goal & Risk Management

Objective

Major purchase

next year

Education

beginning in four

years

Retirement in

20 years

Preserve

Wealth

Balance Risk

and Growth

Grow

Wealth

Defensive

Portfolio

Moderate

Portfolio

Aggressive

Portfolio


Goals-based investing can help prevent rash decisions

Source: 2008 – SEI Wealth Network, “Goals-Based Investing Saves Investors from Rash Decisions”. SEI Wealth Network clients measured by changes in portfolio strategy from the beginning

of September to mid-October 2008. SEI Wealth Network® is an umbrella name for various life and wealth advisory services provided through SEI Investments Management Corp (SIMC).

Survey conducted with US clients only.

Made No

Change

Adopted a Goals-

Based Approach

Significant

Changes to

Allocation

Fully

Liquidated

Portfolio 50%

20%

20%

10%

Goals-Based Approach can save investors from Rash Decisions

Made No

Change

Delayed

Investment

Increased

Lifestyle Pool

75%

5%

20%

The results of this analysis support the assertion that clients using a goals-based investment approach are

less likely to liquidate or make other dramatic changes to their investment strategies during volatile markets.


• Ranking managers by

their five-year returns

provides little insight into

future performance

• SEI believes that a full

assessment of

qualitative as well as

quantitative factors is

required to identify and

monitor the best

managers

The chart takes the top quartile of UK Large Cap Equities managers based on 2003-2007 performance and tracks their

subsequent quartile rankings over the following 5-year period (2008-2012). It also identifies where the top quartile managers

over the current 5-year period (2008-2012) ranked in the previous 5-year period (2003-2007)

Source: SEI, Morningstar Direct, UK Large Cap Universe

5 Years

2003 - 2007

5 Years

2008 - 2012

5 Years

2008 - 2012

5 Years

2003 - 2007

Based on the Morningstar universe of 1,963 UK Equity Large Cap managers # 11% of top quartile managers from 2003 – 2007 are no longer included within the Morningstar UK Equity Large Cap Category *61% of the top quartile managers from 2008-2012 did not have a full five year track record during the previous period

Top

Quartile Top

Quartile 19%

14%

5%

2%

61%*

30%

25%

16%

18%

11%#

SEI’s Investment Philosophy: Key Tenet

Past performance is not a guarantee of future results


Experienced Analysis

• 100 experienced professionals

worldwide

• 20+ years assessing investment

firms

• Site visits and conference calls to

evaluate personnel and investment

process

• Assess sustainability of competitive

advantages

Quantitative Analysis

• Focus on risk adjusted returns

• Advanced statistical process control

techniques to identify skill

• Separate quality of decisions from

outcomes

• Use analytical technology to

understand drivers of return

• Risk management

assessment

Qualitative Analysis

• Examine and understand the

investment philosophy

• Analyse the proprietary

investment process

• Review the team’s

background, tenure,

compensation, and other

factors to determine stability

and commitment

Ongoing Monitoring

• Monitor firm and process changes

• Monitor competitive advantages

• Return and risk monitoring

• Regular site visits and manager

calls

• Approved list of backup managers

Entire Universe of

Investment

Products

Investment Process | Manager selection

1,000

Manager

Visits/Contacts

Year

100+

Specialist

Managers


SEI’s solution:

Goals-Based Portfolios | Meeting a range of investor goals

13

For illustrative purposes only


STABILITY FOCUS

SEI’s Stability-Focused Portfolios seek

growth within a risk budgeting framework

to manage the risk of loss

GROWTH FOCUS

SEI’s Growth-Focused Portfolios seek long-

term growth in line with the broad equity and

fixed-income markets.

SE

I R

etu

rn E

xp

ecta

tion

SEI Risk Expectation

Fixed Income

Equity

Absolute Return

Property

Liquidity

SEI Solution: Core Fund

Target allocation weights are set at the discretion of SEI and are subject to change. As at 31 December 2012

*The absolute return asset class aims to exploit active management opportunities that are not always accessible in conventional asset classes such as equity, fixed interest, cash or

property. This could involve, for example, investing in long and short positions, to help generate profits or protect capital in both rising and falling markets.

**SEI does not show individual holdings information for third party funds.


Important Information This material is not directed to any persons where (by reason of that person's nationality, residence or otherwise) the publication or availability of this material is prohibited. Persons in

respect of whom such prohibitions apply must not rely on this information in any respect whatsoever. Investment in the funds or products that are described herein are available only to

intended recipients and this communication must not be relied upon or acted upon by anyone who is not an intended recipient.

While considerable care has been taken to ensure the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of

any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information.

SEI Investments (Europe) Limited acts as distributor of collective investment schemes which are authorised in Ireland pursuant to the UCITS regulations and which are collectively

referred to as the “SEI Funds” in these materials. These umbrella funds are incorporated in Ireland as limited liability investment companies and are managed by SEI Investments Global,

Limited, an affiliate of the distributor. SEI Investments (Europe) Limited utilises the SEI Funds in its asset management programme to create asset allocation strategies for its clients. Any

reference in this document to any SEI Funds should not be construed as a recommendation to buy or sell these securities or to engage in any related investment management services.

Recipients of this information who intend to apply for shares in any SEI Fund are reminded that any such application must be made solely on the basis of the information contained in the

Prospectus (which includes a schedule of fees and charges and maximum commission available). Commissions and incentives may be paid and if so, would be included in the overall

costs. A copy of the Prospectus can be obtained by contacting your Financial Advisor, SEI Relationship Manager or by using the contact details shown below.

Past performance is not a guarantee of future performance. Investments in SEI Funds are generally medium to long term investments. The value of an investment and any

income from it can go down as well as up. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down.

Investors may not get back the original amount invested. SEI Funds may use derivative instruments which may be used for hedging purposes and/or investment purposes. This material

represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events.

SEI’s goals based strategies are available in both the SEI Strategic Portfolio Fund range and the SEI Goals Based Model range. The SEI Strategic Portfolio Funds may invest in a

combination of other SEI and Third-Party Funds as well as in additional manager pools based on asset classes. These manager pools are pools of assets from the respective Strategic

Portfolio separately managed by Portfolio Managers which are monitored by SEI. One cannot directly invest in these manager pools. The SEI Goals Based Models may invest in a

combination of SEI and Third-Party Funds but do not invest in additional manager pools.

The risk described below may apply to the underlying assets of the products into which SEI’s Strategic Portfolios and Goals Based Models invest:

• Investment in equity securities in general are subject to market risks that may cause their prices to fluctuate over time.

• Fixed income securities are subject to credit risk and may also be subject to price volatility and may be sensitive to interest rate fluctuations.

• Bond or money market instruments are sensitive to inflation rate trends.

• Property assets may be difficult to buy or sell and the impact may be that the cash remains un-invested or property is disposed at an unfavourable price.

• Absolute return investments utilise aggressive investment techniques which may increase the volatility of returns. If the correlation between absolute return investments and

other asset classes within the fund increases, absolute return investments’ expected diversification benefits may be decreased.

• International investments may involve risk of capital loss from unfavourable fluctuation in currency values, from differences in generally accepted accounting principles or from

economic or political instability in other nations.

The SEI Strategic Portfolios and Goals Based Models are denominated in one currency but may hold assets priced in other currencies. The performance of the Funds and Models may

therefore rise and fall as a result of exchange rate fluctuations.

This information is issued by SEI Investments (Europe) Limited (“SIEL”) Time & Life Building, 1 Bruton Street, 4th Floor, London W1J 6TL United Kingdom +44 (0)20 7518 8950. This

document and its contents are directed only at persons who have been categorised by SIEL as a Professional Client, or an Eligible Counterparty, for the purposes of the FSA New

Conduct of Business Sourcebook. SIEL is authorised and regulated by the Financial Services Authority.

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Sei citywire jan_2013

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