SEI Corp. has given birth to its own fund family targeted toward retail investors after more than three years of playing stepparent to the propriety mutual funds of banks.
With the launch of ProVantage Funds, SEI, an investment-services firm, is now marketing retail mutual funds under its own name. However, the funds will be managed by outside advisers.
The ProVantage Fund family offers three intermediate maturity tax-exempt funds and two money market funds. The intermediate funds consist of a national fund, and funds for Pennsylvania and Massachusetts. There are also national and California money market funds.
The ProVantage Funds actually are a new class of shares for existing SEI institutional mutual funds, said Dennis J. McGonigle, senior vice president of mutual funds for SEI.
The institutional funds are no-load products for which investors do not pay a sales fee to purchases shares of the fund. However, for the ProVantage Funds, investors will be assessed a front-end load, making the funds the first offered by SEI to assess a sales fee, McGonigle said.
The ProVantage Funds include fixed-income, equity, and money market offerings, and will be sold through financial intermediaries, such as banks and financial planners.
Officials at SEI, which is based in Wayne, Pa., said they created the fund family to meet the needs of a wider range of investors, particularly those with less to invest.
"Over the years, we've had a lot of requests for products that would meet the needs of people other than high-net-worth investors," said Bert Dalby, marketing manager for ProVantage.
"What's critical now in terms of timing is that non-bank marketers have become aware of the needs of this group," said Richard E. Lieb, president of SEI Investment Services.
Convinced that there is a "huge need" for top quality funds, SEI decided that "limiting ourselves to the high end of the market wasn't the right thing to do right now," Dalby said.
As a mutual fund sponsor that administers more than $37 billion in assets, SEI has helped client banks establish and operate mutual fund families since 1981. The company has been offering its own institutional mutual funds for slightly more than three years.
In creating its retail offerings, SEI is "packaging investment solutions," especially for smaller clients who do not have proprietary funds that meet all of their customers' requirements, Lieb said.
The firm's larger clients, which include Banc One Corp., SunTrust Banks, Midlantic Corp., and United Jersey Banks, do not need SEI's mutual funds, Lieb said. So SEI is gearing its products primarily toward small and medium-sized banks.
Lieb worries that some clients may think their territory is being invaded by the new funds. "We believe it's a mistake for banks to say: ~You're competing with us,'" he said. "They are still thinking they're selling CDs."
Nonbank mutual fund providers, such as Fidelity and Merrill Lynch, are their real competition, Lieb said.
Initially, SEI's family includes eight of its 30 institutional-class funds. Fees for the funds range from no-load for money market funds to 5% for equity funds.
More funds are planned for the future. "As we better understand the needs of our clients we'll try to offer integrated and packaged solutions," Lieb said.
For example, ProVantage's marketing manager anticipates introducing additional tax-free products within a year.
The company may add more single-state funds and possibly a fund with a maturity that falls in between that of its intermediate funds, which have average maturities of three to ten years and its money market funds, which have a maximum maturity of no more than 90 days, McGonigle said.
The firm is also considering whether to launch a long-term municipal bond fund, he added.
Kalen Holliday is a reporter with the American Banker, a sister publication of The Bond Buyer, Sharon R. King contributed to this article.
