Investment Education
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This newsletter addresses industry issues or advanced investment topics suitable for supplementing your investment knowledge. Copies of the papers listed below can be found under the investment education section of RussellLINK.
Transition Composites: Not Ready for Prime Time
First Released: December 2006
"Get your facts first, and then you can distort them as much as you please." Mark Twain (1835-1910). Composite track records are valuable tools for investors choosing investment managers. Comparable information would be helpful in the selection process of transition managers as well. However, without a clear definition of what should be included in transition track records and how performance should be calculated, such composites are likely to be misleading, showing some managers' results in an overly positive light.
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Fixed Income: Innovation in Asset Structure and Investment Strategies
First Released: September 2006
On August 2 the Reserve Bank announced a 0.25% increase in the official discount rate, the second this year. The move didn’t come as a particular surprise and the market consensus is that there are more increases to come. So investors could certainly be forgiven for asking "why invest in bonds?" and, more particularly, "why invest in bonds, now?" The answer will depend on the role bonds play in the investor’s portfolio.
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Do Not Drop The Baton When Managing Your Portfolio's Structure
First Released: August 2006
Twenty years ago, when Russell first set up in Sydney, most superannuation funds were managed by one or more balanced managers. How times have changed! Sector specialists dominate the market now. The typical super fund will have exposure to upwards of a dozen investment managers, either directly or indirectly through a multi-manager provider. From an investment strategy perspective, this is significant progress.
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Risk: You Don't Want to Live With It; You can't Invest Without It
First Released: July 2006
Risk is the sine qua non1 of investment. Without it, investment markets would not exist. It deters the cautious and penalises the imprudent, but it is also the reason why, over long periods of time, stockmarkets outperform bonds. The prospect of extra return is the incentive markets provide to encourage investors to take risk.
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Note: These articles are presented in PDF format. You must have Adobe Acrobat Reader installed on your computer to view PDF files.