Multi-Manager
The Third Level of Russell Diversification
For more than three decades, Russell has devoted considerable resources to identifying, hiring, and managing some of the best money managers in the world. Russell uses a multi-manager approach within investment products. No matter which asset or style is in favour at any given time, this complementary blending of managers can reduce your clients' risk and help provide more consistent returns through all kinds of market environments.
Screening Investment Managers
Each year, through an integrated worldwide network of analysts, Russell evaluates thousands of investment managers and investment products.
Russell's analysts hold more than thousands of research meetings annually — the majority of which are face-to-face — to study each manager's quantitative and qualitative characteristics.
Russell research and monitoring identifies managers worth further scrutiny. Additional research leads to decisions about which managers will ultimately be selected for Russell products globally.
Using various proprietary factors, Russell determines which managers are currently adding value in their style through superior processes and exceptionally talented individuals.
These main factors include:
- Stability — Which manager teams and organisations will have the lowest turnover.
- Superior Environments — Which organisations are most likely to produce above-average returns.
- Performance Indicators — Which style and investment techniques and organisational traits best support potentially superior manager performance.
Selecting the Best
Because research confirms that past performance is not predictive of future performance, Russell's approach gives the most weight to the value of the manager's investment process and the strength of the manager's organisation.
Picking Today's Hot Manager isn't the Solution
To be on top one year, a manager has to take a lot of risk — risk that is just as likely to land them on the bottom in the following years. Our goal is to select managers who have historically performed better than average on a consistent basis.
Testing our Theories
Russell's research analysts use an unmatched, proprietary database of qualitative and quantitative characteristics to identify managers most likely to outperform their benchmark indexes and their peers.
The following table includes some of the characteristics that Russell analyses.
| Qualitative | Quantitative |
|---|---|
|
Personnel/administration |
Performance against peer groups |
|
Investment philosophy |
Performance against benchmarks |
|
Decision-making procedures |
Transactions |
|
Economic and securities research |
Portfolio characteristics |
Continuously Monitoring Managers
Many changes can occur in funds, and investors aren't always aware of them. Key personnel may leave an investment manager firm, or an investment manager might alter their investment style unexpectedly. For these reasons, Russell continuously monitors its managers to make sure they stick to their assignment, replacing them if necessary. This way, your clients investment stays on track with their goal.
Russell's continuous research approach also helps keep the investment manager turnover rate in the low 7% to 10% range, which keeps costs down. Other approaches are susceptible to much greater turnover rates because they are driven by performance, which is inherently volatile.
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