News came last week that SEI had filed to launch the SEI Ang Research Enhanced US Large Cap ETF, based on a strategic collaboration between STOXX and factor investing pioneer, Dr Andrew Ang.
Robert Hum, Head of Investment Product Development and Activation at SEI, says: “We are excited about the platform we have built today. The majority of our ETFs are active, aligning well with current market trends. Approximately 90 per cent of new ETF launches in the US are active, while roughly 70 per cent of assets remain in passive vehicles.”
Driven by this data, Hum says that the firm wanted to continue to push the active ETF line up but also rethink how people use core exposures.
“Dr Ang is a leader in factor investing, and pairing his work with STOXX’s expertise in this area makes this an exciting partnership for us.”
Most of the existing SEI ETF products are in their quantitative investment model.
“Quantitative investing is core to SEI’s heritage. This allows us to be more involved in the quant side of the ETF business.”
The firm has also filed for a high yield bond and alternative credit ETF, which will be similar to an existing mutual fund with a track record of over 30 years.
“This will be our first step into fixed income in the ETF space,” Hum says.
Appetite for ETFs within the firm’s range has seen strong growth over the year, with half a billion dollars’ worth of inflow in the first quarter compared with USD70 million for the first quarter of last year.
The firm has a third filing for an equity factor allocation product along the lines of the active factor model used by an existing institutional mutual fund.
“We are elevating our internal capabilities. This is for the wealth and institutional market, as this strategy was previously available only to institutional clients and has performed well over the past five years.”
“We have a range of individual building blocks based on value, momentum, quality and volatility, and advisers are increasingly asking SEI to make the calls on which strategies to use. There is a significant resurgence in factor investing across index and ETF products.”
Hum observes that many active ETFs have factor-based strategies.
“Moving away from the term smart beta is a good thing, as it implied that regular beta was somehow the opposite of smart. Most investors are factor investors in one form or another,” he says.
The firm has some USD5.5 billion in ETFs on its platform, up from USD2.5 billion at the start of last year and expects to double its line up in terms of the number of products this year.
It is considering options products, researching both option income products as well as buffer products, but remains focused on delivering differentiated exposure.
“Another area we are focusing on is equity ETFs linked with liquid alternatives from our partnership with Dynamic Beta Investments. Fixed income is also an area where we expect to continue expanding, driven by growing demand from our adviser base.”
Last interviewed shortly after his arrival at the firm, Hum predicted aggressive expansion for SEI’s ETF offering.
SEI converts liquid alts mutual fund to ETF and promises aggressive expansion
“The aggressive growth plan continues, and many of the things we were hopeful for are starting to come to fruition. You will see more news from us in the coming months.”
