Can a co-CIO boost your fund launch?
Attivo Investments brought in SEI to help launch and manage its new discretionary funds. It was far from the easy option, says Chief Investment Officer Charlotte Watson, but the partnership has more than proved its worth.
Can a co-CIO boost your fund 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 offering, 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 Investments 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 signing with SEI, Attivo Investments had launched its DFM offering.
A co-CIO arrangement is a partnership more than anything else.
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, adopt a sophisticated approach to clients’ risk appetites, and place a strong emphasis on capital preservation.
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.
Thinking about the whole partnership, it’s helped position us very differently. It’s the best thing we’ve ever done.
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 just four months 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. Everything has been yo-yoing, and 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.”
In their own words: Attivo’s journey with SEI.
See why Charlotte calls it “the best thing we’ve ever done.”
Caroline Deutsch:
Hello, I'm Caroline Deutch, head of marketing at SEI for the EMEA Region, and I'm joined today by Charlotte Watson, who is CIO of Attivo Investments. Welcome Charlotte. So SEI provides a Co-CIO service to you. Can you talk us through what made you go down that route and actually what the Co-CIO service really is for you?
Charlotte Watson:
Yes, certainly. So actually it was a relatively new concept to us in the discovery process. So just to set the scene, we wanted to launch a brand new investment firm to provide investment solutions to the retail clients of financial planners. And there's several ways you can do that and that's do it completely yourself, or you can partner with another investment management firm to create a solution at scale. And that's really what the Co-CIO is. So our entity retains the regulatory permissions and is responsible for creating, managing the portfolios, but you do it in partnership with another firm. So you are really increasing your resources, increasing your team. So that's what the Co-CIO arrangement is.
Caroline Deutsch:
Right, and why SEI?
Charlotte Watson:
Why SEI? Yeah, so it is a really big challenge to find the right partner. So first of all, you've made the decision that you want to use the Co-CIO arrangement, and then the second part is how do you select that partner? You're going to be spending a lot of time together, you're going to be collaborating your businesses, so you've got to make sure it's the right selection. And so with SEI, one of the main reasons was that our alignment in investment philosophy in designing our firm, we wanted to focus on goal-based investing. We wanted to match how a financial planner linked investments to the client. They're able to do it in an easy way for clients to understand. And goal-based investing allows that because you have clients are looking at accumulation at preservation, and it allows them to use that language to recommend the solutions.
So first and foremost, we were looking for a partner that had that same approach to investments, which is obviously SEI, one of the leading people in goal-based investing and innovative investment strategies. That was one box that was checked. Then secondly, it's really most importantly is aligning the culture between two firms. You have to stand for the same things. You are very client-centric. You are innovative, you want to push forward, you are spending a lot of time together, you are combining resources, and it has to work in that sense. So in the meetings that we had and the discovery process that we went through, we really found out that that's where we aligned and that we could work together and produce a solution that was going to be great for the end client.
Caroline Deutsch:
What advice would you give another CIO or firm who's perhaps considering this as a path?
Charlotte Watson:
I think probably the main part would be to see it as a strategic decision rather than purely operational. You're not really outsourcing as such, but you're not really giving the investment management over to somebody else. It's that you are working in tandem. So it isn't just an operational replacement and it's not instead of doing it yourself, it's as well as, so there are layers of complexity because you've got two teams that need to know the investment proposition inside out. You've got two sets of systems because you are replicating all of those model portfolios and strategies in your own system as well as the other. But actually the sum of the parts, what you produce at the end is greater than if you were doing it yourself. You've got two great minds together and you've got resources from both sides of the fence. And also it's an educational piece with both teams because it's a collaborative approach and you really, probably the main part is you need to know the partner that you're working with.
You need to trust them, and there needs to be that team approach in setting this up and launching it, we've been through challenges and obstacles, but as a team, the Attivo investments and SEI, we've overcome each of those because of that trust and working in the team. And the end point really is that we've created something incredibly innovative for the end client. We've taken institutional pricing and access to incredible fund managers to a retail client, and it's a story that the financial planners can take out to their clients. The Co-CIO allows you to deliver something exceptional to the end client, and that's what we're trying to do, is to deliver value and this partnership allows us to do that.
Caroline Deutsch:
Great, so it sounds like advice is really, you need to be thoughtful about it, but the key is selecting that right partner that's going to be really additive to your strategy, thank you.
Charlotte Watson:
Thank you, Caroline.
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