Russell Core Plus Fixed Income Pool >>
The Russell Core Plus Fixed Income Pool is designed to give investors greater diversification and higher return potential than a typical fixed income fund.
A Core Plus strategy provides a wider opportunity set by expanding active investment guidelines to include certain “non-core” fixed income sectors, such as non-Canadian high yield, currency and global debt securities, such as emerging markets.
Core Plus Background
The Core Plus approach has been a well-established fixed income strategy in the U.S. over the past 15 years and has more recently gained popularity amongst institutional investors in Canada. Core Plus is an ideal strategy at a time when foreign investing restrictions have been eliminated and there are greater opportunities for excess return in the global fixed income market.
Core Plus Managers:
Pacific Investment Management Co., LLC (PIMCO):
PIMCO runs approximately 34% of the Pool and employs a broad opportunity set in order to add value to Canadian fixed income accounts. PIMCO’s strength at global macro-economic analysis, combined with a constant review of relative value gives Russell a high level of confidence in the firm’s value added proposition.
AllianceBernstein:
AllianceBernstein manages approximately 33% of the Pool, using a broad opportunity set that includes foreign investment grade corporate bonds, high yield bonds, emerging market debt, and country and currency exposures. The firm’s large and experienced research team across quantitative, credit, and economic disciplines is a major factor in Russell’s positive opinion of the Canadian product.
Goldman Sachs Assets Management:
Goldman Sachs runs approximately 33% of the Pool. Their Canadian Core Plus product seeks to add value in a wide range of top-down and bottom-up strategies, with a significant portion of the portfolio dedicated to non-domestic bonds. The firm has strong specialist teams in all areas of fixed income.
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Core Plus in Today’s Market
The Russell Core Plus Fixed Income Pool strives to be on the leading edge of fixed income strategies and products as the Canadian fixed income landscape undergoes an evolution. Such examples of this evolution are:
- Example 1: The removal of the Foreign Property Rule in 2005 opened up more opportunities for Canadian fixed income managers to add value above the benchmark, through strategies such as: global bonds, high yield, and emerging market debt.
- Example 2: The low-volatility environment in fixed income markets, relative to historically higher volatility levels, has led to a compression of risk premiums. This has made it increasingly difficult for Canadian fixed income managers with limited opportunity sets to reach their excess return targets.
Key Benefits
- Increased diversification, as a result of a wider opportunity set, lower associated correlations relative to traditional fixed income strategies, and less reliance on duration.
- Provides an effective complement to a balanced portfolio, by seeking increased performance of the fixed income segment of the portfolio while not significantly increasing the total risk.
- Active bond managers in the Pool have increased ability to add value where they see attractive opportunities.
- Seeks higher excess return potential than a typical fixed income strategy.
Range of Investment Strategies
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For more information or client-friendly materials on the new Russell Core Plus Fixed Income Pool, please contact us at (888) 509-1792.