Solutions
Completion portfolios
Precisely aligning your portfolio with your strategic beliefs
Completion portfolios are a powerful tool for an investor allocating to multiple manager strategies. The explicit role of these completion portfolios is to complement the existing managers and align the total portfolio with desired risks and exposure. The completion portfolio can maintain your chosen strategic asset allocation to keep your portfolio aligned to your investment beliefs.
What are completion portfolios?
Customised exposures used in combination with third-party active managers
Enable multi-managers to achieve preferred positioning, expressing strategic beliefs
Removing unwanted portfolio biases, without swamping stock selection
Exploring the benefits
Why incorporate completion portfolios within multi-manager funds?
Improved control of exposures
Completion portfolio strategies can provide a systematic way to help align the total portfolio with preferred positioning. This can improve the portfolio's overall risk and return outcomes. Our clients use completion strategies to make deliberate decisions on which exposures are intended and unintended and to be able to manage the total plan's exposure. They also incorporate exclusions or ESG preferences into a completion portfolio.
Improved risk-adjusted returns
For investors to achieve their desired long-term outcomes, portfolios must be managed to benefit from long-term return sources but with the ability to respond to short-term market risks and opportunities. At the same time, risks must be managed appropriately throughout evolving markets. Completion portfolios help investors achieve these outcomes.
Reduced cost of production
In many cases, including a completion strategy can help reduce the total cost expenditure on aggregate manager fees. It may also minimise turnover, trading, and required transition costs.
Four ways to use completion portfolios
1. Better management of factor and portfolio risks
Completion portfolios can ensure exposures to factor risks in the total portfolio are aligned with targets. This can mean reducing unintended exposure to volatility risk or targeting specific levels to other strategy factors, such as value, momentum, quality, or others. In addition, the amount of active sector or regional risks are managed.2. Gaining efficient access to desirable risk premia
Completion portfolios are designed to fill gaps where high-conviction managers don’t exist. Examples include deep or defensive value exposure, quality income and intelligent credit or currency factors.3. Free portfolio managers to focus on opportunities for alpha
By creating risk management at the total-portfolio level, portfolio-manager decisions are freed up to focus on high-conviction alpha opportunities. In recent years, PMs focused on growth managers, while the completion portfolio provided value and low-volatility exposure to balance risk.4. Opportunistic allocations
When shorter-term opportunities arise in the market, clients can reposition risk in the portfolio in a nimble, precise, cost-effective manner.Research Insights
Controlling unintended factor risk
Explore our case study on how completion portfolios
can help investors to manage unintended volatility risk.
Factor capabilities:
The power behind completion portfolios
Completion portfolios are designed to go beyond asset-class definitions, to multi-dimensional factors, including value, momentum, quality, growth, and low volatility. Equity and fixed-income factor portfolios for each of these categories can be built across multiple universes.
We can help to create completion portfolios with customised factor definitions and weighting schemes—which can be implemented either within factor completion strategies or as stand-alone single or multi-factor portfolios.
Institutional investors can also leverage Russell Investments' analytic engine and tools to see risks and exposures in real-time at the total-plan level.
Recent blog posts
Hear from our experts on the issues our clients care about
We’d love to talk
Please reach out to me directly or send an email to connect.
Daniel Greyling
Head of Intitutional Sales
+61 2 92295234