Completion Portfolios

A powerful tool for attaining target exposures.

The benefits The Russell Investments advantage Research resources Customized Portfolio Solutions Contact us

Even the best-designed multi-manager portfolio can move out of alignment with your investment policy statement. Just a small misalignment over time can result in exposure gaps, unintended risks, and a significant diversion from the path of your strategic investment beliefs.

When an investor allocates capital to more than one manager, an interaction effect exists, which will impact the investor's overall portfolio outcome. Due to this interaction effect between managers, unintended risks may emerge in the portfolio. Simply put, the combined positions of all managers may result in a bias toward a particular risk related to sector, region, or factor. These risks may not be fully aligned with the investor's preferred positioning based on long- and short-term investment opportunities and desired risk allocations.

Russell Investments' completion portfolios are designed to keep a client's investments precisely aligned with their investment beliefs without sacrificing the power of a multi-manager approach.

What are completion portfolio or portfolio completion strategies?


Completion portfolios (or portfolio completion strategies) 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 the desired risks and exposure of a client's total portfolio, thus managing the interaction effect.

Customized exposures used in combination with active third-party managers.

Enables multi-managers to achieve preferred positioning, expressing strategic beliefs.

Removes unwanted portfolio biases without swamping stock selection.

Completion portfolios use security and derivative investments to target specific factors, sectors, regions, and currency exposures. This helps investors ensure that these risks are being managed and exposure gaps are being reduced while still allowing manager security selection to be the primary driver of overall performance.
 

The benefits of completion portfolios


Completion portfolios (or portfolio completion strategies) 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 the desired risks and exposure of a client's total portfolio, thus managing the interaction effect.

Improve control of exposures

Completion portfolio strategies can provide a systematic way to solve for misalignment in portfolio exposures. They can help align the total portfolio with preferred positioning and improve the overall risk and return outcomes of an investor's portfolio.

Improve risk-adjusted returns

To achieve the 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. Completion portfolios help investors achieve these outcomes.

Reduce the cost of production

In many cases, including a completion portfolio can help reduce the total cost expenditure on aggregate manager fees. It may also minimize turnover, trading, and required transition costs.

Four ways we help clients with completion portfolios

1. Better management of factor and portfolio risks

Completion portfolios can ensure exposures to factor risks of 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 exposure to areas of the market where high conviction managers don't exist

Completion portfolios are designed to fill gaps. Examples include deep or defensive value exposure, quality income, and intelligent credit or currency factors.

3. Unshackling PMs in their manager allocation decisions

By creating risk management at the total-portfolio level, portfolio managers' decisions are freed up to focus on high-conviction alpha opportunities. In recent years, PMs focused on growth management while the completion portfolio provided value and low volume exposure to balance risk.

4. Opportunistic allocations

When shorter-term opportunities arise in the market, the client can reposition risk in the portfolio in a nimble, precise, cost-effective manner.

The Russell Investments advantage

Experience matters. We've been building and managing completion portfolios for institutional clients since 2008. Our completion portfolio platform has expanded to approximately 100 individual separate accounts, with more than $24 B in AUM.¹ This includes completion portfolios used directly by institutional clients and those used within Russell Investments' multi-asset solutions.

Our seasoned specialists provide the expertise, resources, and infrastructure required to design and implement customized investment frameworks to address interaction effects and optimize your portfolio to improve risk-adjusted performance and prevent unintended and uncompensated risk.

We provide opportunities for clients with synthetic overlays to utilize liquidity more efficiently by investing in optimized strategies that align with their desired fixed income exposures.

Better performance outcomes through creative strategies and quality execution

We approach each event as a short-term asset management assignment, providing consultative insight to find optimal solutions for the unique attributes of each transition.

We source and access liquidity in an unbiased fashion through our multi-venue trading platform which provides breadth and depth of market access. Our strong performance track record across all asset classes demonstrates the value of our approach and process.

Global transition management experience¹

In 2024, we managed 99 events and transitioned $88.7 billion.

Our global team includes 20 implementation professionals who specialize in transition management.

Alignment of interests and fiduciary oversight

We work as an agent - never as a principal - which minimizes conflicts of interest.

As an asset manager, we maintain fiduciary oversight and provide a duty of care to investors as well as full transparency on all costs and changes.

¹ As of December 31, 2024.

Capabilities for greater portfolio precision

Factor investing has been one of Russell Investments' core capabilities for more than 40 years since the launch of the Russell-style indexes.

EXTENSIVE QUANT INFRASTRUCTURE AND FLEXIBLE IMPLEMENTATION

CONSISTENT
RISK MODELING

ROBUST PORTFOLIO CONSTRUCTION TECHNIQUES

THOUGHTFUL AND ACADEMICALLY-SUPPORTED FACTOR DEFINITIONS

Fixed Income/Currency

Rates factor (value/carry)

Intelligent credit (value)

  • Investment grade
  • High yield
  • Fallen angels
  • Global credit/government
  • Quasi-Sovereign-enhanced beta

Currency: Value, Carry, and Trend

Passive/smart beta strategies versus external indices

LDI solutions

Enhanced cash

Equities

Single and multi-factor solution:

  • Value
  • Momentum
  • Quality
  • Low volatility
  • Growth

Completion portfolios

Systemic strategies, i.e., quality income

 

 

 

¹ Source: Russell Investments as of December 31, 2023.

Research resources

We have a long tradition of deep thinking on the most complex challenges investors face.

CASE STUDY

How can a completion portfolio help enhance outcomes at the total-portfolio level?

Our case study highlights four ways to use completion portfolios.

Read the client case study

WHITE PAPER

Precisely aligning your portfolio with your strategic beliefs

Research authored by:

Nick Zykowski, CFA
Managing Director, Co-Head of Customized Portfolio Solutions

Evgenia Gvozdeva, Ph.D.
Managing Director, Head of Research

Read now

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Customized Portfolio Solutions


Specialist expertise and strategies to help your team gain greater portfolio control, limit costs, reduce risk, and enhance returns.

Transition Management

We assist our clients in managing their investment performance and risks when restructuring their portfolios or asset classes.

Interim Management

Manage cost and smooth the transition between investment managers while maintaining performance, and reducing risk and administrative burden.

Overlay Services

An essential tool for managing large pools of capital, derivative overlays help manage risk elements and improve performance.

Trading and Execution

Execution solutions to achieve enhanced returns using the latest advances in technology to find liquidity, reduce transaction costs and manage risk.

Currency Management

Manage foreign exchange (FX) trading costs and currency risk by drawing upon our currency investment team and FX trading specialists.

Enhanced Portfolio Implementation

A platform designed for asset managers that combines all advisory models and investment insights into one centrally managed, segregated account.

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