In a move designed to help financial advisors meet the growing demand for low-cost, tax-conscious investment strategies, SEI has launched a set of new tax-managed exchange traded fund (ETF) strategies.
The new investment offerings, which include five strategies that span a broad risk-return spectrum, give advisors the flexibility to better manage the impact of taxes while seeking to maintain the expected risk-return characteristics of a client’s portfolio.
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Developed as a tax-efficient and scalable way to give clients exposure to ETF strategies, SEI’s tax-managed ETF offering consists of five distinct strategies: conservative, moderate, market growth, aggressive, and equity.
The strategies invest in underlying ETFs, each of which has its own investment goal, that are selected through SEI’s research-based approach that seeks to provide high levels of liquidity and diversification across a variety of asset classes. The strategies typically consist of equity and fixed-income ETFs, but may also provide exposure to additional asset classes, such as real estate, commodities, and currencies.
Kevin Crowe, head of Product Development for the SEI Advisor Network, said: "Clients are demanding more low cost solutions that will not only address their specific investment goals but also help offset the current increase in taxes. We’ve developed a unique set of strategies that are designed to maintain the characteristics of their individual portfolios while lowering the cost and improving tax efficiency. SEI has long been an innovator in the tax-managed investment space and this new offering complements our existing line of actively tax-managed strategies. At a time when investors are more sensitive to tax implications, these strategies will provide advisors with the flexibility, transparency, and tax advantages that their clients demand."
To manage the impact of taxes, the strategies may use tax-management techniques such as purchasing municipal fixed-income ETFs to seek to create tax-exempt income, controlling portfolio turnover levels, selling securities with the least tax impact, and opportunistically harvesting losses.
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By GlobalDataSEI will also seek to manage the portfolio in a manner intended to avoid the occurrence of a "wash sale" while maintaining exposure to its desired asset classes. These techniques are what make the new ETF strategies unique.
The tax-managed ETF strategies join SEI’s existing tax-managed product line, which includes tax-managed mutual funds and the company’s extensive separately managed accounts program. One of the pioneers in offering tax-managed investment solutions, SEI has been offering a range of tax-managed investment strategies since 1998.
