Does SEI Add Value?

Last Updated Feb 18, 2011 12:14 PM EST

If you've been reading this blog for a while, you know that most of the information contained is focused on the science of investing, or what the results from peer-reviewed academic journals show as the best strategy for achieving your financial goals. We also discuss the failures of other strategies, again according to what the historical data shows. Today, we'll see how SEI fares when compared to its passive counterparts.

According to its Web site, SEI bills itself as having access to the "leading investment managers globally" and "constant manager monitoring by a team of investment specialists worldwide." So it not only has the top managers, but even the top managers of managers. Thus, if consistent outperformance is possible, SEI should be able to provide it.

The time period we'll look at is 2000-2010, as that's the longest time period capturing the returns of all the funds we'll examine (which will include a look at another fund company tomorrow). There are four domestic categories where the funds of SEI can be compared to a passively managed fund from Dimensional Fund Advisors:

  • Large-cap growth
  • Small-cap growth
  • Large-cap value
  • Small-cap value

As you can see, the passively managed funds outperformed the actively managed funds in all categories. The difference isn't limited to just domestic markets. Below are the returns of comparable international funds for the same time period.

In every case, the passively managed funds of DFA outperformed the actively managed funds of SEI. This isn't the first time we've seen evidence of this, as we saw when we looked at the funds of Waddell & Reed, as well as the company's Ivy funds.

Tomorrow, we'll see how the funds of Russell Investments fared.

More on MoneyWatch:
Does Waddell & Reed Back Up Its Claims? Do Waddell & Reed's Ivy Funds Add Value? TIPS Update for February 2011 Why Keeping Your Investments Local Is a Bad Strategy Quest for Alpha: 10 Rules for Being a Successful Investor
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    Larry Swedroe is director of research for The BAM Alliance. He has authored or co-authored 13 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.