SEI White Paper: Retail Alternatives Offer Long-Term Growth Opportunities for Private Fund Managers

SEI White Paper: Retail Alternatives Offer Long-Term Growth Opportunities for 
Private Fund Managers 
SEI Names Six Areas to Focus on for Success in Retail Alternatives
OAKS, PA -- (Marketwired) -- 06/12/13 --   A white paper released
today by SEI (NASDAQ: SEIC) shows managers are increasingly turning
to retail alternatives in an effort to diversify their revenue
streams, earn more consistent fees, and market their capabilities
with greater latitude. According to the paper, "The Retail
Alternatives Phenomenon: What Enterprising Private Fund Managers Need
to Know," retail alternatives are one of the fastest growing segments
in the asset management industry, creating much needed opportunities
for private fund managers as the growth rate of institutional
allocations to alternative investments seems to be slowing. In fact,
industry analysts, such as global management consulting firm McKinsey
& Co., predict alternatives will double their share of the U.S.
mutual fund market and account for nearly a quarter of all retail
revenue by the end of 2015. The paper outlines six key areas that
managers must take advantage of in order to capture the growing
retail alternatives market. 
"Private funds have seen the growth in institutional allocations to
alternative investments slow in recent years, but the rapidly
expanding retail alternatives market could provide managers with new
outlets for their capabilities and help create new revenue streams,"
said Ross Ellis, Vice President, Knowledge Partnership for SEI's
Investment Manager Services division. "While there is a vast
opportunity, moving into the retail space can present its own unique
challenges, so it's important that managers go in with eyes wide open
and understand the operational and compliance nuances before making
the leap. Those managers who do the due diligence and take a
long-term strategic approach will be able to make the best decisions
for their businesses, which will ultimately determine their success
in the retail alternatives space." 
The paper reveals that while there is a whole new area of
opportunity, many private fund managers will face significant hurdles
in the retail landscape, which is distinctly different from the
alternative market in terms of product development, marketing and
distribution, the regulatory and operational environment, and fee
structures. The paper identifies six key areas that private fund
managers must focus on in order to succeed in the retail marketplace: 

--  Distribution. With more than 300,000 registered advisors spread across
    a variety of US sales channels, the distribution of retail
    alternatives can be a complex maze that also includes specialty
    consultants and intermediary platforms. Managers need to develop
    marketing strategies, understand platform requirements, and maintain
    specialized sales teams.
--  Education. With nearly half of individual investors (48 percent)
    saying they have little or no understanding of alternatives, and
    nearly two-thirds (64 percent) saying they would need to learn more
    before investing, managers will need to provide educational content
    that helps financial professionals and also helps advisors clearly
    explain alternative strategies to clients.
--  Track Record Requirements. Funds typically need to have a minimum
    performance track record, as well as meet assets under management
    requirements before intermediary gatekeepers will consider them for
    inclusion on their platforms. Given the shortage of long-term
    performance track records for retail alternative products --
    Morningstar found that only 36 percent of U.S. retail alternative
    funds had 5-year performance data -- managers looking to enter the
    retail space should begin strategic planning efforts in a registered
    format as soon as possible.
--  Strategy Suitability. Some strategies commonly employed by managers
    are better suited to the retail space than others, since mutual funds
    face greater limitations than private funds when it comes to
    investment strategies. Managers should consider both liquidity
    restrictions and diversification requirements when deciding what
    strategies to offer and the vehicle through which to offer them.
--  Product Packaging. Private fund managers will need to determine which
    retail vehicle is the best for packaging their chosen strategy. When
    making any product-packaging decision, managers should factor in the
    requirements and costs of both short- and long-term distribution. It's
    important that managers fully understand the various fee structures
    associated with each distribution channel in order to make the best
--  Fund Structure. Depending on the investor base and distribution
    channels selected, as well the operational and financial resources at
    their disposal, managers must consider whether they will be a direct
    sponsor or sub-advisor of the fund, and whether to launch a
    stand-alone fund or join in a shared trust structure. Regardless of
    which structure is chosen, a private fund manager should consider
    partnering with an experienced mutual fund service provider to
    expedite the transition into the retail market.

The paper is published by the SEI Knowledge Partnership, which provides
ongoing business intelligence and guidance to SEI's investment
manager clients. To request the full paper, which includes
statistical source information, visit 
About SEI's Investment Manager Services Division 
 SEI's Investment
Manager Services division provides comprehensive operational
outsourcing solutions to support investment managers globally across
a range of registered and unregistered fund structures, diverse
investment strategies and jurisdictions. With expertise covering
traditional and alternative investment vehicles, the division applies
customized operating services, industry-leading technologies, and
practical business and regulatory insights to each client's business
objectives. SEI's resources enable clients to meet the demands of the
marketplace and sharpen business strategies by focusing on their core
competencies. The division has been recently recognized by Buy-Side
Technology as "Best Outsourcing Provider to the Buy Side" and "Best
Fund Administrator," by Hedge Funds World Middle East as "Best
Service Provider," by Global Investor as "Hedge Fund Administrator of
the Year," and by HFMWeek as "Most Innovative Fund Administrator
(Over $30B AUA)" in the U.S. for hedge funds and "Best Administrator
- Technology Provider" in Europe. For more information, visit  
About SEI
 SEI (NASDAQ: SEIC) is a leading global provider of
investment processing, fund processing, and investment management
business outsourcing solutions that help corporations, financial
institutions, financial advisors, and ultra-high-net-worth families
create and manage wealth. As of March 31, 2013, through its
subsidiaries and partnerships in which the company has a significant
interest, SEI manages or administers $495 billion in mutual fund and
pooled or separately managed assets, including $206 billion in assets
under management and $289 billion in client assets under
administration. For more information, visit 
Company Contact:
Dana Grosser
+1 610-676-2459 
Media Contact:
Jason Rocker
Braithwaite Communications
+1 215-564-3200 x 110 
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