Investors look to replenish depleted portfolios
Russell’s ‘best ideas’ fund offers investors a meaningful boost to returns
SYDNEY, 16 June, 2009 - Australian investors and their advisers will need to implement creative strategies to bolster the returns on their depleted investment and super savings, according to global investment specialist Russell Investments.
Today Russell announced its latest performance figures as well as a range of enhancements to its Russell Australian Select Holdings Fund. This is an innovative Australian equities fund which gives super fund and retail investors access to the best stock ideas selected by Russell’s highly ranked local fund managers.
The Russell Select Holdings Fund has delivered excess returns after fees of 6.93 percent for the three months to end of May 2009 and 5.53 percent for the financial year to date – effectively ‘turbo charging’ returns during a period of unprecedented market volatility. The fund has also added significant value to Australian equity investors’ portfolios during one of the worst investment declines in history. The table below outlines the returns of the Russell Australian Select Holdings Fund over the S&P/ASX 300 Index.
| Time period (to 31 May 2009) | Russell Australian Select Holdings Fund returns | Benchmark returns (S&P/ASX 300) | Russell Australian Select Holdings Fund excess returns (net of fees) |
| 1 month | +4.75% | +1.46% | +3.29% |
| 3 months | +22.83% | +15.90% | +6.93% |
| 6 months | +8.76% | +5.12% | +3.64% |
| FYTD | -17.84% | -23.37% | +5.53% |
| 1 yr | -25.43% | -29.17% | +3.74% |
| 2 yrs | -16.54% | -18.71% | +2.17% |
Source: Russell Investments, June 2009
Russell has a renowned investment manager research capability which analyses and evaluates fund managers from around the world. Russell’s traditional multi-manager, multi-style approach identifies the world’s best fund managers and combines their unique individual stock selection approaches to deliver investors higher returns with lower risk.
The Select Holdings strategy goes a step further to isolate fund managers’ ‘best ideas’ by building a single concentrated portfolio of stocks that are most favoured by a group of these managers at a given time, no matter what their approach to stock selection.
The Select Holdings strategy was developed for US institutional investors in 2004, following a decade of comprehensive research into historical fund manager holdings. This research showed that a portfolio of stocks, independently selected and commonly held by multiple managers, generated outperformance two to six times greater than that of the underlying manager portfolios.
Symon Parish, Russell’s Chief Investment Officer for Australasia, said super funds and individual investors are still dealing with an uncertain investment landscape, and many people are under pressure to recoup their investment losses so that they have enough money in retirement.
"After one of the sharpest equity market declines on record, investors are understandably looking for a performance boost. Our advice is to use their risk appetite wisely," Mr Parish said. "At the end of the day, you want your investment outcomes to be the result of skill rather than luck. Select Holdings is essentially the collective wisdom of our highest ranked managers, delivered via a single concentrated portfolio," he said.
Since its establishment in 2006, Select Holdings has amassed more than $2 billion in mainly institutional assets across a range of US and UK equity-based funds.
In Australia, retail and self managed super fund (SMSF) investors are also able to directly access the Select Holdings strategy. This means that Australia is the only market in the world where individual investors can invest directly into this sophisticated institutional solution.
Mr Parish said the Select Holdings concept supports the ‘wisdom of crowds’ notion, which asserts that thought diversity allows the predictive power of groups to rise above that of its individual members.
“The Select Holdings theory has held up strongly for the past two and a half years and has helped investors boost their investment portfolios despite the extreme market swings witnessed in recent months,” he said.
Recent enhancements
A number of recent enhancements have been made to the Select Holdings strategy in order to fully capture the insights of Russell’s extensive research across various equity markets:
- Conviction weighting: an enhanced weighting algorithm has been introduced that skews the portfolio to those stocks with the strongest signals
- Diversity kicker: the process has been enhanced to capture and exploit the diversity of the underlying managers’ investment processes
- Implementation booster: more efficient and effective implementation of the process has been achieved through the introduction of techniques designed to reduce market impact. This leads to lower spread costs and increased speed of execution.
Mr Parish concluded: “Our unrivalled manager research platform and 24hr global trading capabilities put Russell in a unique position to leverage the strategies of the world’s best fund managers and develop new opportunities to help maximise returns. This kind of innovation is especially needed in the current economic climate, where investors are looking more than ever for innovative solutions to achieve risk controlled return generation.”
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 (“RIM”). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not a reliable indicator of future performance. Any potential investor should consider the latest Product Disclosure Statement (“PDS”) in deciding whether to acquire, or to continue to hold, an investment in any Russell product. The PDS can be obtained by visiting www.russell.com.au or by phoning (02) 9229 5111. RIM is part of Russell Investments (“Russell”). Russell or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including broker or adviser, and may receive fees, brokerage or commissions for acting in these capacities. In addition, Russell or its associates, officers or employees may buy or sell the financial products as principal or agent. MKT/2077/0609