Can a Co-CIO boost your DFM launch?

Launching a discretionary fund management (DFM) business can be a daunting process, from designing a strategy and investment proposition to creating client materials.

A key question is whether to attempt to set up the operation entirely in-house or bring in a partner company. Charlotte Watson, Chief Investment Officer at Attivo Investments, has done both and is firmly of the view that bringing in a partner company transformed the process for the better.

In-house versus co-CIO.

In 2024, Watson was given the task of launching a DFM offering for Attivo from scratch. This was not the first time Attivo (or Watson) had launched a DFM , having set up their first in 2014. The first time around, they did the entire job in-house.

“We created our own set of model portfolios, hired a team of investment managers and research analysts. We did our own stock notes and created our own commentary. Basically, we did everything,” says Watson.

The launch was a success, but a few years later, Attivo refocused its business and sold the DFM operation. By 2024, Attivo had grown significantly and decided to return to DFM.

“The second time around the market was completely different,” says Watson. “Our new DFM needed to complement our skilled financial planners, to be a business we could scale, and with access to institutional pricing. And we needed to do it a new highly regulated, value-conscious environment driven by consumer duty.”

Watson researched the options for months, and after an exhaustive analysis, she decided that this time round, a co-chief investment officer (co-CIO) agreement with SEI was the best solution. 

By 2 January 2025, just four months after engaging with SEI, Attivo Investments had launched its DFM offering.

Culture and philosophy are key.

“A co-CIO arrangement is a partnership more than anything else. It’s quite a big strategic decision, and the relationship needs to be collaborative and transparent, and there has to be trust,” says Watson.

Establishing a compatibility of cultures and a shared investment philosophy between Attivo and SEI were the foundation stones of the partnership, according to Watson: “It's not just about appointing a co-CIO and then you’ve solved all the problems. It’s about merging two cultures. It only works if you are on the same page.”

The DFM solution created jointly by Attivo and SEI is delivered through three model portfolio families tailored to a range of client objectives. Strategies are goals-based meaning they adopt a more relevant approach to managing risk for investors,  placing a strong emphasis on delivering the real world objectives for the clients of financial planners.

SEI acts as co-CIO and provides core operational services. “SEI is an extension of our investment management team handling portfolio construction and fund selection, performance management, risk analytics, client materials, and operational support to put those investment solutions on the relevant retail platforms,” Watson explains.

Whose hands are on the wheel?

While the co-CIO solution has proved a success for Attivo, it should never be regarded as ‘the easy option’, says Watson.

“Knowing that the investment management is being done and done very well, means you do get some time back. But it’s not about doing less work on the investment side. The investment committee and analysis remains a shared effort in terms of workload, but ultimately, we own the investment proposition. We have full control, voting rights, and responsibility.”

The process of setting up the DFM operation has not been stress-free nor without problems.

“I am not going to tell you that everything went right, because sometimes it did not. But every single time we had a problem, we resolved it with SEI as a team. Trust, honesty, and transparency are what allows you to do that, and that is why we set so much store on that cultural alignment at the start,” says Watson.

Partnership provides an edge.

The ability to set up and launch the DFM portfolios at speed was one of the major advantages of partnering with SEI. Other benefits, according to Watson, include the access to institutional pricing, diversification within and across the portfolio models, and access to global managers.

But while launching a DFM offering in a short space of time was itself a major achievement, the timing brought an unexpected challenge.

“We could not have launched at a crazier time,” says Watson. “In the first three months of this year, we have already had three market corrections, geopolitical conflict, tariffs. If there was ever going to be a time to demonstrate the resilience of our proposition, it would be now. I am really pleased to say our capital preservation strategy has been doing incredibly well.”

Having experienced both ways of launching a discretionary fund management business—in-house and with SEI as co-CIO—Watson’s verdict is clear.

“Thinking about the whole partnership, it’s helped position us very differently. It’s the best thing we’ve ever done.”

Important information

This is a marketing communication. 

The material on this webpage is provided for informational purposes only. This information is issued and approved by SEI Investments (Europe) Ltd (“SIEL”) 1st Floor, Alphabeta, 14-18 Finsbury Square, London EC2A 1BR. 

SIEL is authorised and regulated by the Financial Conduct Authority in the United Kingdom. While considerable care has been taken to ensure the information contained within this webpage 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. 

The views and opinions expressed by external speakers and SIEL on this webpage are subject to change. They should not be construed as investment advice.