Russell researches 'developing' managersas retirement plans strive to support smaller businesses (Russell.com)

Russell Researches 'Developing' Managers as Retirement Plans Strive to Support Smaller Businesses

TACOMA, Wash. — Dec. 5, 2003 — In response to increasing demand among some institutional investors, Russell Investment Group is directing its multi-manager research capabilities toward finding smaller, entrepreneurial investment management firms. These so-called "developing" investment managers are being sought out by some public and corporate pension plans and other organizations that want to support small businesses while tapping into sharp, energetic investment talent.

Russell's research of developing managers received its first business win earlier this week when the California State Teachers' Retirement System (CalSTRS) announced Russell as one of three firms that will provide investment services to the pension fund's Developing Managers Program. Russell received an equity assignment from CalSTRS as part of the fund's $600 million Developing Managers Program.

"This CalSTRS assignment is a timely proof statement about the growing importance of smaller, diverse and developing investment management firms," said Craig Ueland, president and CEO-elect at Russell. "We know institutional investors often want to support small businesses and yet are required to seek insightful managers as part of their investment policy. Our role is to offer them responsible and thoroughly researched access to these developing firms."

Developing managers are defined as investment management firms with $2 billion or less under management. Some developing firms may oversee as little as $10 million. By comparison, larger, well-known investment management firms often manage upwards of $50 billion or more. Some developing manager firms also are owned by women or minorities — a feature that also appeals to some institutional investment organizations.

"Our aim is to find smaller, high-quality investment firms that are still in the relatively early stages of their business development" said Tereasa Gandhi, senior research analyst at Russell Investment Group. "These managers tend to be very entrepreneurial, passionate about investments, and flexible due to smaller asset bases. All of this can contribute to winning performance for developing managers who also have a solid investment proposition."

"We are covering the full style spectrum of the stock market, but researching to find the small investment management firms that are relatively undiscovered gems," said Gandhi. Russell's developing manager equity strategy also includes managers who focus on specific styles such as growth stocks, value stocks, small cap stocks and market-oriented stocks.

Russell also takes into account minority and women ownership of firms. "We monitor the ownership because, all things being equal on the investment side, some investors are interested in supporting minority- and women-owned firms," said Gandhi.

Russell's research of investment managers encompasses more than 1,500 specialist managers and 3,500 investment products worldwide. The company employs more than 250 investment professionals to support a wide range of multi-manager investment solutions for institutional and individual investors. Russell's assessment of developing managers is supported by the firm's 14-member U.S. equity research team.

Russell Investment Group, a global leader in multi-manager investment services, provides investment products and services in more than 35 countries. Russell manages more than $85 billion in assets and advises clients worldwide representing more than US$1.6 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo.

Russell Investment Group is a registered trade name of Frank Russell Company, a Washington, USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of The Northwestern Mutual Life Insurance Company.

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