In 2025, SEI celebrates its 30th year offering a multi-manager solution to investors. The benefits of SEI’s global, open architecture investment approach, transcends regions, underlying asset class exposures, and investment cycles, delivering a consistent and distinct set of advantages.

SEI’s edge: Five advantages of our multi-manager portfolios

1) Open architecture allows for industry leading managers across a complete portfolio 

No single asset manager is a top performer across all of their strategies, and many concede this point. SEI’s open-architecture approach allows our skilled and well-resourced global investment team the ability to handpick the best available strategies, based on our research, for each allocation across an investor’s entire portfolio. Our team is not beholden to a pre-determined set of asset managers. Why limit yourself to the good, the bad, and the ugly of one asset manager?

2) Unearthing unique manager opportunities 

Since 2004 we have seeded more than 20 new strategies, providing our clients with access to unique investment managers, while harnessing the first mover advantage - investment managers who are eager to outperform, with a nimble asset base and attractive fees. 

Exhibit 1 below shows equity, fixed income, and alternatives strategies we have launched with our sub-advisors. Our skill is not limited to just identifying interesting investment ideas, these managers also deliver— demonstrating a 95% hit rate since their inception1.
 

Unlike many other professional investors, SEI does not require an arbitrary three- or five-year track record to select a manager. Instead, we rely on our independent research that combines both qualitative and quantitative analysis to drive our conviction levels. 

Our dedication to applying our disciplined, time-tested approach to building an extensive and dynamic roster of managers means SEI can offer a wide selection from which to find a solution that fits each investor’s specific needs.

3) Flexible but defined investment mandates that align with manager skill 

SEI provides each investment manager that we work with a customized set of investment guidelines that is structured to ensure that the manager retains flexibility to excel in its area of expertise while also establishing guardrails to limit excessive risk and restrict trades outside of the manager’s core competency. 

Whereas investment guidelines that asset managers establish for their own mutual funds are typically broad, SEI’s customized guidelines are constructed in consideration of a manager’s individual strengths and weaknesses. We believe that asset managers that make investment decisions without the guidance of an unbiased third party are more likely to take unfavorable risks outside their areas of expertise. 

As gatekeeper of the portfolios we manage, one of our key responsibilities is to create a more stable experience. To that end, we believe that thoughtfully constructed investment guidelines by an intermediary like SEI can help optimize clients’ investment experiences.

4) Forward-thinking portfolio construction 

As a multi-manager, SEI is able to objectively assess the portfolio construction process applied by money managers and we can adjust for any limitations in any manager’s portfolio construction capabilities. Taking this vital step aids in optimizing risk-adjusted return. 

Examples of forward-thinking portfolio construction options include: 
• Blend managers with distinct alpha sources to outperform a market capitalization benchmark, 
• Combine managers with low and high risk profiles and complementary drivers of excess returns, 
• Allocate to potentially return-enhancing sub-asset classes; for example, adding a micro-cap allocation to a small cap equity portfolio (detailed below). 

To illustrate, in 2020 we strategically introduced exposure to micro-cap stocks within our core U.S. Small Cap Equity funds as there exist more pronounced market inefficiencies and alpha source exploitation opportunities within micro-caps as compared to larger cap peers. We believe the manager’s quantitative, trend-following process provides diversified exposure to this cohort of smaller companies within the bottom half of the Russell 2000 Index while simultaneously limiting exposure to the riskiest contingent. Since its inception—which fortuitously coincided with the post-COVID small cap stock rally—the strategy generated positive excess returns over both the Russell Microcap and Russell 2000 indexes, as illustrated by the blue line in the chart below.

 

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1‐800‐DIAL‐SEI.

 

Another example of forward-thinking portfolio construction and manager sourcing is the use of 130/30, or "extension," strategies in our multi-manager funds. These strategies offer inherent advantages in portfolio construction. Specifically, a manager can take positions in stocks they believe will underperform, allowing them to express negative views. By extending portfolio powers to permit short positions—typically up to 30%—these views can be fully and efficiently expressed. The short positions are balanced with additional long exposure, ensuring the portfolio maintains a full 100% net market exposure. 

This approach also enhances risk management. We have found that managers can increase stock-specific risk with extension strategies while potentially reducing other uncompensated risks. At SEI, we have used extension strategies for over a decade and currently employ them in some of our U.S. large-cap and international equity funds. To date, these strategies have been beneficial to performance, as shown in Exhibit 3 on the following page. 

In short, a thoughtful approach to portfolio construction can potentially smooth a portfolio’s return profile, mitigate downside risk, and enhance the level of outperformance.

 

The performance data quoted represents past performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-800-DIAL-SEI.

5) Harness the power of diversification

The late Nobel Prize-winning economist Harry Markowitz said, “Diversification is the only free lunch” in investing. We couldn’t agree more. 

Just as diversification across asset classes helps to mitigate risk and volatility across a full market cycle, so, too, does diversification across investment managers. SEI’s multi-manager portfolios serve this type of diversification by blending industry leading managers that offer style differentiation and complimentary investment approaches. 

We believe that combining managers with negative or low correlations can reduce total portfolio risk, as illustrated in Exhibit 4. While the diversification benefits eventually start to diminish with the inclusion of additional managers, the risk-reduction benefits can be sizable relative to a single manager allocation.

 

Imagine there is a unique manager with a high-risk profile that would not be appropriate as a solo allocation for certain portfolios. By combining this high-risk manager with additional managers, the portfolio can benefit from capturing the average upside return of the blended managers, but not the average downside as shown in Exhibit 5.

 

SEI positions our multi-managed portfolios with the goal of delivering both competitive excess returns and attractive risk-adjusted returns relative to peers. We seek to create stability with little additional cost. This philosophy results in diversified portfolios—an approach that doesn’t change based on temporary performance or popularity of a given manager or asset class. Our risk management mindset is critical to the long-term stability of our portfolios, performance, and that of each investor.

Strength in numbers

Our manager-of-managers solution builds portfolios designed to outperform over the long term. By combining managers with complementary investment styles, we seek to maximize risk-adjusted returns, regardless of what style is in favor at a given moment.



















Important information 

Information provided by SEI Investments Management Corporation (SIMC).

This information is for educational purposes only and should not be relied upon by the reader as research or investment advice. 

For those SEI products which employ a multi-manager structure, SIMC is responsible for overseeing the subadvisers and recommending their hiring, termination, and replacement. SIMC is the adviser to the SEI Funds, which are distributed by SEI Investments Distribution Co. (SIDCO). SIMC and SIDCO are wholly owned subsidiaries of SEI Investments Company. 

Investing involves risk, including possible loss of principal. There is no assurance that the objectives of any strategy or fund will be achieved or will be successful. Diversification does not protect against market risk. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. 

Index returns are for illustrative purposes only and do not represent actual investment performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results. 

To determine if the Fund is an appropriate investment for you, carefully consider the investment objectives, risk factors and charges, and expenses before investing. This and other information can be found in the Fund's full or summary prospectus, which can be obtained by calling 1-800-DIAL-SEI. Read the prospectus carefully before investing.