Features of the Russell Investments Dynamic Real Return Funds

As one of the largest investment outsourcers in the world1, with $433.9 billion in assets under management (more than three times Australia's largest super fund), we have the scale and flexibility required to deliver strong performance in an increasingly globalised and uncertain investment environment.


Best of Breed approach


No single firm has a monopoly on investment skill.

Embedded within our Dynamic Real Return Funds is an open architecture selection process, scouring the globe for the best investment opportunities, wherever they reside.

Our analysts seek to identify superior investment manager talent through a proprietary research process based on objective analysis. As the list narrows, we conduct on-site , in-depth, face-to-face interviews with the top managers. This effort relies on a team of 24 charterholders and 1 PhD ranking and classifying a universe of more than 7,500 investment products across the globe. This includes monitoring more than 2,306 investment manager firms2. Complementing this, we are also recognised for being among the most thorough in operational due diligence in the industry3.

We combine decades of consulting experience, proprietary analytics and our renowned manager research to bring the optimal combination of managers in each asset class.

Globally based manager researchers and portfolio managers


The majority of investment opportunities reside outside of Australia.

We operate a global business with specialists in the major markets around the world. Unlike many competitors, we do not buy manager research and we do not research managers on an annual 'fly in, fly out' research trip.

We value local knowledge, building a dedicated team of almost 300 professionals in 21 countries. We base our portfolio managers and manager researchers in the markets in which they work allowing them to better understand their portfolios, enabling quicker and more decisive action.

Additionally, our scale allows our portfolio managers and researchers to genuinely specialise. Roles are designed to avoid the distractions and competing responsibilities inherent in a more generalist role.

Ultimately this leads to higher quality investment ideas for inclusion in the funds.

Multi-asset expertise


The investment landscape of today requires a deeper level of skill and expertise to manage investments effectively.

Our Dynamic Real Return Funds are managed by our global multi-asset team with a robust track record.

The team has spent decades refining our approach to multi-asset investing, both through empirical research and direct observation. When you invest in one of our funds, you gain access to all of this experience and expertise.

 

Additional return sources


In the current low return environment, traditional sources of return are not reaching their historical highs.

Along with traditional asset classes, the Dynamic Real Return Funds give investors access to a broad array of non-traditional asset classes including real assets, alternative yield sources, non-directional absolute return strategies and esoteric investment strategies. Strategies that may not be accessible to average investor.

For example, your portfolio may utilise:

  • long- or short-term absolute return strategies that do not depend on the underlying direction of the share market
  • volatility strategies that reduce the funds' reliance on traditional equity risk premia
  • alternative yield sources, such as senior bank loans, that reduce exposure to rising interest rates

Downside protection


With drawdowns greater than 5% doubling in the last 10 years, downside protection strategies have become even more crucial.

Beyond asset allocation and manager selection, the funds use a number of strategies to reduce downside risk. Two notable active strategies include shares substitution and shares downside protection. These strategies are particularly important in market environments like today, when share valuations and downside risks are both high.

Shares substitution strategies see the funds invest in asset classes that offer equity-like returns, but with less risk. For example, in 2016 high yield bonds and Australian bank loans were key share replacement strategies. In 2017, emerging market local debt and global bank loans have been successful strategies.

Shares downside protection is utilised for the remaining shares exposure. Both our US and European equity exposures employ option protection, executed by out fiduciary team, further protecting downside risk.

Next step




Arrange a time with Tanya to explore how real return funds can help smooth investment outcomes for you and your clients.

For more information please contact Tanya on:

P: +61 3 9270 8138
M: 0434402865

Email Tanya
1 Russell Investments was globally ranked among the leading institutional outsourced managers based upon outsourced assets out of 77 firms in the Pensions & Investments’ survey, issued in June 2016. Our expanding investment outsourcing solutions have more than $109 billion (as of 31 March 2016) in institutional outsourced assets around the globe. Pensions & Investments delivers news, research and analysis to the institutional investment market. Source: Pensions & Investments, “Special report on outsourcing and insourcing”, Issue date: 13 June 2016. Available at: pionline.com/specialreports/other/20160613
2 As of December 31, 2015.
3 For a sixth year in a row, Russell Investments was voted among the top two for having the best manager due diligence practices by respondents in a 2014 survey of nearly 100 consultant relations professionals. Source: "Russell's Manager Research Toughest in Industry: Survey," FundFire Survey for Consultant Relations Professionals, August 2014.

* Meetings 12 months up to June 30, 2016 include face-to-face as well as teleconference/video-conference meetings (also includes multiple meetings with the same investment management firm).

Definitions:

Total Investment Products Monitored: is the total number of products listed in the database.
Investment Products continually Researched is the number of products in the database with an active offering status where Russell Investments has applied a defined rank (1, 2, 3, 4, A, B, C, D).
Investment Products with a primary 'Hire' Rating is the number of products in the database with an active offering status with a Hire (4) rank.
Investment Products used in Russell Investments Funds is the total number of products with signed executed contracts for Russell Investments funds as of the quarter-end reporting period.

Note: Research numbers include Alternative products.

Please note that some changes have been made to the criteria we apply when calculating the figures for our manager research coverage. The figures for all four levels of the manager research funnel (shown above) have fallen since last published, with ‘Total Investment Products Monitored’ falling materially. The research numbers now do not include closed-end private markets funds or products.
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