Last updated: Dec-13-2018

SEIís award-winning Global Managed Volatility Fund laser-focuses on valuation
12/13/2018 10:07:34 PM
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Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert

By Dave Paterson  | Wednesday, November 29, 2017


Low-volatility funds continue to be a popular choice with investors and advisors. One of the worries I have had with these funds is that many are trading at valuation levels that are well above the broader market. That is one of the appealing factors of the SEI Global Managed Volatility Fund offering, which trades at valuations well below the broader market and its peer group. It garnered the FundGrade A+® Award in 2016.

Despite having been in the business for 40-plus years and advising on more than US$750 billion, SEI is not exactly a household name. That is because they have focused on providing investment solutions targeted mainly at institutions. In Canada, they have a modest retail presence, and offer several multi-manager, standalone, and portfolio solutions aimed at financial advisors.

This offering is a multi-manager fund that looks to find stocks the management teams believe will be less volatile than the overall market. There are currently two managers in the fund, each using different, but complementary processes. The first uses a value-focused approach that looks for stocks that are not only expected to be less volatile, but also are viewed as cheap and out of favour, with near-term potential. The second manager uses a model that is a balance among value, momentum, and quality metrics. The teams don’t just look for low-volatility names, but also pay attention to correlation between the stocks. The mix between managers is adjusted based on the expected relative attractiveness of each style.

Top holdings as of Oct. 31 included Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE), Wal-Mart Stores Inc. (NYSE: WMT), Intel Corp. (NASDAQ: INTC), and Merck & Co. Inc. (NYSE: MRK).

Not only has this fund been one of the stronger low-volatility offerings, it has also done very well compared with the broader global equity category. As would be expected, volatility has been below average, and it has shown good downside protection in a falling market.

I see this as one of the more attractive low-volatility offerings in the global equity category. The diversified, multi-manager approach, combined with the reasonable valuation and growth outlook leads me to favour this offering over many of its peers.

SEI Global Managed Volatility Fund Class E
Fund company:
SEI Investments Canada
Fund type:
Global Equity
FundGrade™ Rating: C (October 2017)
FundGrade A+ Award: 2016
Style: Large Cap Value
Risk level: Medium
Load status: Front-end load
RRSP/RRIF suitability: Good
Manager: SEI Investments
MER: 2.03%
Fund code: PCA630 (front-end load)
Minimum investment: $1,000

Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.


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