Russell opens 'best ideas' fund to retail investors
New stand-alone Select Holdings fund provides concentrated exposure to fund managers' most confident stock calls
SYDNEY, 31 October 2006 - Global investment and superannuation specialist, Russell Investment Group (Russell), has launched a stand-alone version of its innovative Select Holdings strategy, allocating A$100 million of the funds' limited capacity to retail investors.
The Russell Australian Select Holdings Fund is the first of its kind to be offered to Australian individual investors, giving smaller investors unique access to the 'cream' of Australian stock picks from some of Australia's most exciting specialist equities managers - managers already hand-picked by Russell through its extensive manager research process.
The Select Holdings concept was launched in Australia in April 2006 to further enhance the performance potential of Russell's flagship multi-manager Australian equities fund, the Russell Australian Shares Fund (RASF). Select Holdings is designed to create additional alpha (above benchmark returns) by leveraging the best stock selection ideas of the seven individual fund managers who manage money for RASF.
Mr. Peter Gunning, Russell's Chief Investment Officer Asia Pacific, said the Select Holdings strategy was performing well globally, and that the new Australian stand-alone fund was an exciting opportunity for local investors.
"Russell has been saying for some time that alpha is becoming harder to find and that investors need to become more creative with their strategies. We believe the Russell Australian Select Holdings Fund is an excellent example of new techniques that allow investors to capture enhanced returns," Mr. Peter Gunning said.
The Russell Australian Select Holdings Fund provides exposure to the managers 'best ideas' by investing in the stocks that are most commonly 'over weighted' by the RASF managers.
Mr. Gunning said: "Our research has shown there is an interesting relationship between the number of managers overweighting a stock and the subsequent level of outperformance for that stock - and Russell Select Holdings is able to capture that insight."
He went on to point out that the fund will be a highly concentrated satellite fund. Retail investors would use the fund in a similar way to larger investors - that is, to give an additional performance boost to a core Australian equities strategy.
"The RASF deliberately blends a diverse group of active fund managers who are chosen for their strong stock selection ability across a range of investment processes. The benefit for investors in Russell Australian Select Holdings Fund is that the strategy takes the most confident stock calls from each manager, providing a concentrated exposure to our managers' collective best ideas."
Mr. Gunning said the stand-alone fund was a good example of how Russell is responding to the new low returns environment. Russell expects to see a continued deterioration in the Equity Risk Premium (the long-run difference between equity returns and the risk-free Government Bond return), with a five year ERP forecast of 3.0 per cent - a drop from 5.8 per cent over the past 40-odd years and 7.5 per cent over the past 60-odd years.
"Given the new low returns environment, Russell has been actively seeking ways to create alpha for investors. As the world's leading multi-manager we are in a unique position to leverage the strategies of the best fund managers and develop new opportunities to maximise returns. The market has welcomed this strategy internationally and we are pleased to see Australia's sophisticated investors continue to be quick to embrace new investment ideas. We expect that the additional A$100 million available for individual investors, such as self-managed super funds or other personal investment vehicles, will not last long," he said.
Russell pioneered the Select Holdings strategyin the US in November 2004. Comprehensive research, based on over ten years of historical manager holdings, shows that stocks independently selected by multiple managers generated outperformance two to six times greater than that of the underlying manager portfolios. To date, investors in the US and Europe have successfully invested more than A$3 billion in the strategy globally, which has been integrated into 17 Russell funds.
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 ("RIM"). This document provides general information only. It 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. The information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not indicative of future performance. RIM is the issuer of units in the Russell Funds. An invitation to apply for units in the Russell Funds is made by RIM in a Product Disclosure Statement ("PDS"). Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in any Russell Fund. The PDS is currently available and can be obtained from Russell at Level 17 19-29 Martin Place, Sydney or by phoning (02) 9229 5111. RIM 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, RIM or its associates, officers or employees may buy or sell the financial products as principal or agent. You may contact RIM on (02) 9229 5111.
