SEI, Rothschild in Strategic CIT Partnership

Over the past two decades, Rothschild has established a successful track record in its small-, small- to mid-, and large-cap U.S. equity strategies. The new vehicles make these strategies available as daily valued offerings to the defined contribution (DC) market.

The relationship with Rothschild gives SEI the ability to quickly launch and make available cost-effective retirement products to the U.S. market. Rothschild and SEI have developed a suite of CITs that focus primarily on the DC plan market.

John Alshefski, senior vice president of SEI’s investment manager services division, noted the continually evolving fiduciary landscape for retirement assets and emphasized that CITs are uniquely positioned to take advantage of this evolution. Several reasons make this investment vehicle advantageous in a changing fiduciary landscape, Alshefski told PLANSPONSOR. “We have seen marked growth in the overall CIT market,” he said. “The number of advisers is growing, as is the number of strategies.”

CITs work well for retirement assets because they can only hold assets of qualified retirement plans, so a CIT can be structured to meet the specific needs of the plan sponsor, Alshefski explained. 

Mutual funds and limited partnerships, on the other hand, may have a more difficult time structuring a product to meet the needs of tax-exempt and taxable investors in the same product, he explained. As demand for different retirement products envelops the market, CITs can be more flexible in fitting into different models.

Alshefski noted that CITs offer a level of flexibility not found in other vehicles. “For example, a CIT is an excellent structure for custom target-date funds [TDFs] because this structure allows a level of customization that a mutual fund target-date structure can’t offer,” he said. “A CIT target-date fund can invest in mutual funds, separate accounts, limited partnerships, EFTs [exchange-traded funds] and other CITs, but a mutual fund target-date fund can’t invest in CITs and is limited in the percentage it can invest in certain assets.”

Finally, Alshefski said, “A CIT provides a plan sponsor with an ERISA [Employee Retirement Income Security Act] investment management fiduciary for the assets they invest in a CIT, and a mutual fund does not.” 

SEI’s expertise in CITs is a key benefit of the relationship, according to Michael Tamasco, Rothschild’s chief marketing officer. “We have worked with SEI to develop and launch seven new daily valued CIT products for the U.S. market,” Tamasco said. “SEI has a flexible architecture and a proven track record of success, and we are confident that our strategic partnership can not only support these CITs today but will also support our business as we grow the product line.”

According to Alshefski, SEI has continually invested in both technology and people in order to provide solutions that fill the retirement market’s ever-changing and demanding needs. More information is on SEI’s website . 

Jill Cornfield