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Systematic Core Strategies

By harnessing the power of technology, the SEI Systematic Core Strategies seek to modernize the traditional structure of passive investments, like index mutual funds and exchange traded funds (ETFs), by directly purchasing a subset of the component stocks within a broad market index.

Available to those who use our trust accounting services, the Strategies can bring greater transparency to your investment solutions and a cutting-edge strategy defined by your priorities. Potential benefits to your clients include:

  • Cost-effective, broad equity exposure – Three Strategies comprised of individual securities that are designed to deliver low tracking error and provide an overall risk-factor exposure similar to the benchmark.
  • Active tax management1 – Ongoing management such as tax-loss harvesting and portfolio overlay that provide the potential for tax alpha in your clients’ accounts.
  • Control and personalization – Your clients gain full transparency into the individual companies in which they invest. You can offer sustainable investment screening (ESG, SRI, faith-based) to align with your clients’ priorities.

Flexible investment implementation options – You can use the Strategies as stand-alone implementations or in combination with other SEI Managed Account Solutions.

Three Strategies that can be easily implemented and personalized within your clients’ portfolios:

STRATEGY NAME

BENCHMARK INDEX

TARGET NUMBER OF SECURITIES

Systematic U.S. Large Cap Core Strategy

Russell 1000

~150

Systematic U.S. All Cap Core Strategy

Russell 3000

~250

Systematic International Developed Core (ADR) Strategy

MSCI EAFE

~150

When may the SEI Systematic Core Strategies be ideal solutions?

While appropriate for nearly any client situation where personalization and transparency are desired, the Strategies may be ideal for clients who:

  • Want to hold individual stocks (versus pooled mutual funds or ETFs)
  • Want a passive exposure to a broad equity market
  • Have existing low-basis, high unrealized gain securities to transition
  • Want to optimize tax-efficiency
  • Have sustainable investing (ESG, SRI, faith-based) priorities

1 Tax management is only applied to taxable accounts.

Glossary:

Tax loss harvesting: A strategy of selling securities at a loss to offset a capital gains tax liability. It is typically used to limit the recognition of short-term capital gains, which are normally taxed at higher federal income tax rates than long-term capital gains, though it is also used for long-term capital gains

Portfolio overlay: Refers to a management style that harmonizes an investor's separately managed accounts. Overlay management uses software to track an investor's combined position from separate accounts, and analyzes any portfolio adjustments to ensure the overall portfolio remains in balance and to prevent any inefficient transactions from occurring.

Tracking Error: Quantitative measure of the extent performance of a variable differs or coincides with a benchmark.

Tax alpha: A measurement of tax efficiency that attempts to isolate the value of active tax management by comparing a manager versus a passive benchmark.

Environmental, Social, and Governance (ESG): A set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

Socially Responsible Investing (SRI): An investment that is viewed as socially responsible due to the nature of the business the company conducts. SRI can be achieved through social screens which allow investors to prioritize their environmental, faith, social and corporate-governance convictions, which then translate into social-investment guidelines that are applied to each client’s account.

Investment services are provided by SEI Investments Management Corporation (SIMC). SIMC is a wholly owned subsidiary of SEI. Your financial advisor is not affiliated with SEI or its subsidiaries.

For those portfolios of individually managed securities, SIMC makes recommendations as to which manager will manage each asset class. SIMC may recommend the termination or replacement of a money manager and the investor has the option to move the account assets to another custodian or to change the manager as recommended.

Please see SIMC’s Form ADV Part 2A (or the appropriate wrap brochure) for a full disclosure of the fee schedule.

Tax and Tax Management Techniques Disclosures – SIMC does not represent in any manner that the tax consequences described as part of its tax-management techniques and strategies will be achieved or that any of SIMC’s tax-management techniques, or any of its products and/or services, will result in any particular tax consequence. The tax consequences of the tax-management techniques, including those intended to harvest tax losses, and other strategies that SIMC may pursue are complex and uncertain and may be challenged by the IRS. Neither SIMC nor its affiliates provide tax advice.

Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax, penalties and/or interest which may be imposed by the IRS or any other taxing authority; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor. Accordingly, Clients should confer with their personal tax advisors regarding the tax consequences of investing with SIMC and engaging in the tax-management techniques described herein (including the described tax loss harvesting strategies) based on their particular circumstances.

Clients and their personal tax advisors are responsible for how the transactions conducted in an account are reported to the IRS or any other taxing authority on the Client’s personal tax returns. SIMC assumes no responsibility for the tax consequences to any Client of any transaction.

There are risks involved with investing, including loss of principal. There is no assurance the goals of the strategy discussed will be met nor that risk can be managed successfully. Tracking error risk is the risk that the performance of a portfolio designed to track an index may vary substantially from the performance of the benchmark index it tracks as a result of cash flows, portfolio expenses, imperfect correlation between the portfolio’s and benchmark’s investments and other factors. This risk is magnified when sampling a benchmark index as the strategy may not track the return of its benchmark index as well as it would have if the strategy purchased all of the securities in its benchmark index.

Index returns are for illustrative purposes only and do not represent actual investment performance. Index 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.

Environmental, social and governance (ESG) guidelines may cause a manager to make or avoid certain investment decisions when it may be disadvantageous to do so. This means that these investments may underperform other similar investments that do not consider ESG guidelines when making investment decisions.

In all cases, a Client may, at any time, impose reasonable restrictions on the management of a Client’s account. Such restrictions may include one or more “screens” offered by SIMC that restrict or permanently remove securities from the Client’s selected strategy on the basis of ESG or other criteria.

SEI has selected and engaged Institutional Shareholder Services Inc. and MSCI ESG Research LLC, the “vendors” to provide the selected screens. The vendors can vary from other ESG vendors and advisers with respect to its methodology for constructing screens, including with respect to the factors and data that it collects and applies as part of its process. As a result, the vendors’ screens may differ from or contradict the conclusions reached by other ESG vendors or advisers with respect to the same issuers. A client restriction, including the selection of a screen, will likely contribute to performance deviations from the strategy, including underperformance.

Any securities mentioned herein are intended only as examples of specific sector and/or industry information and are not intended to constitute an investment recommendation.