After more than three years of playing stepparent to the proprietary mutual funds of banks, SEI Corp. has given birth to its own fund family.
With the launch of its ProVantage Funds, the investment-services firm is marketing retail mutual funds under its own name for the first time. However, the funds will be managed by outside advisers.
The ProVantage Funds include equity, fixed-income and money market offerings, and will be sold through financial intermediaries, including banks and financial planners.
Focus on Lower-End Investors
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.
Based on the theory 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," Mr. Dalby explained.
As a mutual fund sponsor that administers more than $37 billion in assets, SEI has helped client banks establish and operate mutual fund families.
In creating its own retail offerings, SEI is "packaging investment solutions," especially for smaller clients who do not have proprietary funds that meet all of their customers' requirements, Mr. 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, Mr. Lieb said.
So SEI is gearing its products primarily toward small and medium-sized banks. Although Mr. Dalby would not specify which banks had signed on, he said the firm had four or five clients and about 25 additional strong prospects.
One selling strength being promoted is the funds' superior management, an advantage SEI portrays through the ProVantage name.
The funds "provide access to top institutional investment managers who typically require $5000,000 to $5 million to open an individual account," Mr. Lieb said. Now these managers are available, "for as little as $1,000 per initial investment."
Tony Gray, who established his reputation at SunBank Capital Management, will be running SEI's Capital Appreciation Portfolio.
Data Base Selects Advisers
Other managers include Arthur Schwartz of Weiss, Peck & Greer Advisers and Wellington Management Company's Paul Kaplan.
The key difference between SEI's funds and others is the use and selection of outside managers.
To select advisors, SEI uses the company's investment performance data base. The data base includes information on more than 1,000 money managers with more than $450 billion in investable assets.
Mr. Lieb worries that some clients may think their territory is being invaded. "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, he 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," Mr. Lieb said.
ProVantage's marketing manager anticipates introducing additional tax-free products within a year.