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March 7, 2012
Russell Investments unveils new bond ETFs
- Unique ETFs allow investors to build portfolio around desired outcomes
SYDNEY, March 7, 2012- Russell Investments, the global asset management firm, has today announced it is launching three bond ETFs: the Russell Australian Government Bond ETF (ASX code RGB), the Russell Australian Semi-Government Bond ETF (ASX code RSM) and Russell Australian Select Corporate Bond ETF (ASX code RCB). The three new ETFs will give Australian investors a new and easy way to access bonds and have been built to work together, or separately, depending on the risk/return objectives of the investor. It will allow them to build a portfolio tailored to their needs – such as diversification, reduced risk or income and will be unique among bond ETFs about to hit the market.
The new ETFs will add to Russell’s suite of Australian ETFs which have been built to help answer investors’ specific needs, including the Russell High Dividend Australian shares ETF (RDV) and the Russell Australian Value ETF (RVL).
“Russell is continuing to innovate and develop leading investment solutions for investors. Backed by custom-built indexes, these bond ETFs will satisfy a unique need in an investor’s multi-asset portfolio,” said Chris Corneil, CEO of Russell Investments Australasia. “Fixed income is a crucial part of a well-constructed, multi-asset portfolio, particularly in the current environment, and investors now have another tool to access this asset class in an easy and low cost way.”
Amanda Skelly, director of ETFs at Russell Investments, said she expects the ETFs to be particularly popular with SMSFs and also advisers and brokers who up until now have not had an easy way to access bonds. In the benchmark study of the SMSF sector, Intimate with Self Managed Superannuation, recently commissioned by Russell and SPAA, SMSF advisers said the top two areas they provide advice on were bonds and fixed interest investments (76.8%) and cash products term including deposits (72.9%).
“We think advisers will really be able to add value to their clients’ portfolios by advising them on how to effectively use bond ETFs, and we intend to focus on education of how bond ETFs work and they can be used in a portfolio,” said Ms Skelly. “Many retail investors are interested in exploring options to access fixed income other than term deposits, hybrids or managed funds and we believe bond ETFs will be a great complement to these.”
All three of Russell’s new ETFs carry only the most liquid securities that are rated investment grade or higher. They also have transparency of the underlying holdings, with all the bonds held within the ETF displayed daily, and a market maker function to further promote liquidity.
Unique ETFs offer better risk/return for investors
Russell’s ETFs will be based on the DBIQ indexes, a series of customised indexes designed specifically to meet the different needs of Australian investors. Russell research has shown that investors are looking for greater control, stability and income. The rules-based indexes are equally weighted, which gives a more diversified risk, rather than concentrating too much on the larger issuers.
“Traditional fixed income composite indexes don’t necessary offer an accurate exposure to the investable bond universe, for example they often overweight exposure to the largest creditors. The result is an investor’s exposure is biased towards the largest creditors/borrowers exposing them to non-desirable market dynamics and potentially higher risks,” said Ms Skelly. “We’ve already had positive feedback about how our ETFs allow an investor to better diversify their total portfolio.”
“We’ve designed our ETFs to give investors the control to customise their exposure and achieve the outcomes they want – whether that is reduced risk; diversification; or a stable income with greater liquidity than a term deposit,” concluded Ms Skelly.
Russell’s bond ETFs will be listed for trading on the Australian Stock Exchange on Tuesday 13th March 2012.
For more information on Russell’s ETFs please click here or to schedule an interview please contact Honner Media on 8248 3753.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offer actively managed, multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell’s core capabilities extend across capital markets insights, manager research, Indexes, portfolio implementation and portfolio construction.
Russell has about $141 billion in assets under management (as of 12/31/11) and works with 2,300 institutional clients, more than 500 independent distribution partners and advisors, and individual investors globally. Through its Australian Member Administration Centre, Russell provides leading administration and member services to over 370,000 individuals. As a consultant to some of the largest pools of capital in the world, Russell has $2 trillion in assets under advisement (as of 6/30/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 3,000 managers around the world. Russell traded $1.5 trillion in 2010 through its implementation services business. The Russell Global Indexes calculate over 50,000 benchmarks daily covering 85 countries and more than 10,000 securities.
Russell is headquartered in Seattle, Washington, USA and has offices in Amsterdam, Auckland, Beijing, Chicago, Dubai, Frankfurt, London, Melbourne, Milan, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com/au or follow us @RussellInvestAU.
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS License 247185 (‘RIM’). This communication 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. Any potential investor should consider the latest Product Disclosure Statement (‘PDS’) for The Russell Australian Government Bond ETF, the Russell Australian Semi-Government Bond ETF and the Russell Australian Select Corporate Bond ETF (together ‘the Russell Bond ETFs’ or ‘the Funds’) in deciding whether to acquire, or to continue to hold, units in a Fund. Currently, the DBIQ 0-3 year Investment Grade Australian Corporate Bond Index only includes bonds issued by the four largest banks in Australian, however the composition may change in the future in line with the index methodology. A copy of the PDS is available at www.russell.com/etfs. Only persons who have been authorised as trading participants under the Australian Securities Exchange (‘ASX’) Market Rules can apply for units in the Funds through the latest PDS. Investors who are not Authorised Participants looking to acquire units in the Funds cannot invest through the PDS but may purchase units on the ASX. Please consult your stockbroker or financial adviser. The Funds are not sponsored, endorsed, sold or promoted by Deutsche Bank or its affiliates. Neither Deutsche Bank nor its affiliates make any representations or warranties, express or implied, to the owners of the Funds or any other person regarding the advisability of investing in the Funds or as to the results obtained from the use of the DBIQ 5-10 year Australian Government Bond Index, the DBIQ 0-5 year Australian Semi-Government Bond Index and the DBIQ 0-3 year Investment Grade Australian Corporate Bond Index (the Indexes). Deutsche Bank and its affiliates have no obligation or liability in connection with the operation, marketing, trading or sale of the Funds or use of the Indexes and/or the Methodology for the Indexes. Deutsche Bank and its affiliates shall not be liable (whether in negligence or otherwise) to any person for any error in the Indexes and/or Methodology and shall not be under any obligation to advise any person of any error therein. MKT/4454/0312
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