Russell Identifies Aggregate Exposure Manager as Critical Role to Keep Pace with Rising Investment Complexity (Russell.com)

Russell Identifies Aggregate Exposure Manager as Critical Role to Keep Pace with Rising Investment Complexity

Tacoma, WA — November 13, 2007 — Continuing its tradition of innovative implementation solutions, Russell Investment Group has outlined a skill set to help large institutional investors adopt the latest investment strategies while effectively integrating the new exposures and risks these cutting-edge strategies can create. Russell has identified this critical new function — aggregate exposure management — in response to its clients needing a sophisticated and holistic approach to the demands associated with many of today's new strategies.

"An unprecedented onrush of new investment products and strategies have resulted in portfolios that are more complex than ever before, with increased odds of a performance gap between paper portfolio and realized results," said Michael Thomas, Chief Investment Officer, Russell Implementation Services. "There is an increasingly visible cost associated with the delay between identifying a strategy and getting it into the portfolio, and Russell believes that an aggregate exposure manager makes it possible to act more quickly and efficiently."

The aggregate exposure manager can provide institutional investors with improved fiduciary oversight, a mechanism to earn administrative alpha through implementation efficiencies and a platform to capture the early-adopter's advantage associated with new investment strategies. "Broad investment strategy should remain the domain of the investment committee, but decisions about how approved exposures are implemented should be delegated to an implementation expert," said Mr. Thomas.

The aggregate exposure manager plays a key role in the consideration and implementation of new investment strategies and also for those investors making significant adjustments to their asset allocations. South Carolina Retirement System Investment Commission is adopting a dramatically different policy target and has leveraged Russell's aggregate exposure management capabilities to realize these changes. "Our Investment Commission committed to an aggressive timeline which would not have been possible without the use of an aggregate exposure manager," said Bob Borden, Chief Investment Officer, South Carolina Retirement System Investment Commission. "Having the platform in place has allowed us to affect significant progress towards our ultimate target while freeing up time to focus on identifying alpha opportunities."

As institutional investors migrate to more complex portfolios, Russell has identified several potential inefficiencies. Examples of the inefficiencies that the aggregate exposure manager would strive to protect against include: portable alpha structures that result in redundant trades; private equity investments that create unintended exposures associated with capital calls and distributions; and liability hedges that generate significant cash flows that disrupt the overall asset allocation of the fund.

"For more than 25 years, Russell has been a pioneer in the management of investment risk and performance, and our development of the aggregate exposure management function is part of our ongoing commitment to bring our clients innovative and world-leading investment strategies and products," said Greg Gilbert, managing director, Russell Implementation Services. "Our clients are grappling with increasing layers of complexity, and we are proud to leverage our knowledge capital and operational expertise to meet this latest challenge."

More information about the aggregate exposure manager being proposed by Russell can be found on this page.

About Russell: Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. With nearly $231 billion in assets under management (as of 9/30/07), Russell serves individual, institutional and advisor clients in more than 40 countries. Russell provides access to some of the world's best money managers. It helps investors put this access to work in corporate defined benefit and defined contribution plans, and in the life savings of individual investors. Founded in 1936, Russell is a subsidiary of Northwestern Mutual Life Insurance Company and headquartered in Tacoma, Wash. Russell has principal offices in Amsterdam, Auckland, Hong Kong, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Singapore, Sydney, Tokyo and Toronto.

Contacts:
Jennifer Tice, 253-594-1858
Matt Burkhard, 718-875-2122

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