Quarterly Multi-Asset Growth Strategy Update – Q1 2019

Product updates and commentary in response to key market developments.

Performance review

The Fund rallied over the first quarter of 2019. Risk assets staged an impressive rebound from December 2018 lows; the allocation to global and emerging market equities proved particularly beneficial to fund performance.

The allocation to credit also contributed; a dovish Fed, strong oil prices and optimism over a trade accord between the US and China tightened IG credit and high yield spreads. The allocation to unconstrained bonds, convertible bonds and floating rate bonds also contributed.

The Fund’s foreign exposure (approx. 15%) acted as a slight drag on absolute returns as the Pound was the strongest G10 currency over Q1 (i.e. any non-sterling exposure was penalised).

Performance (%)

Average annualised returns

Russell Investments Multi-Asset Growth Strategy GBP Performance (%) 1 month 3 months Year to date 12 months 3 years 5 years Since inception
Return Gross of Mgmt Fee 1.1 6.1 6.1 2.0 5.8 5.0 6.2
Return Net of Mgmt Fee 1.1 5.9 5.9 1.2 5.0 4.2 5.4
Benchmark 1.0 1.1 1.1 6.6 7.2 6.4 7.1

Source: Confluence. Data as at 31 March 2019. Inception: 8 December 2009.

Discrete rolling 12-month performance (%)

Average annualised returns

Returns shown in GBP Q1 2014 - Q1 2015 Q1 2015 - Q1 2016 Q1 2016 - Q1 2017 Q1 2017 - Q1 2018 Q1 2018 - Q1 2019
Return Gross of Mgmt Fee (0.80) 9.0 -1.3 12.0 3.7 2.9
Return Net of Mgmt Fee 8.2 -2.1 11.1 2.9 2.1
Benchmark 5.0 5.4 7.4 7.8 6.6

Source: Confluence. Data as at 31 March 2019. Inception: 8 December 2009.

Portfolio review

Asset allocation

Quarterly Fund Performance Q4 

Source: Russell Investments. Data as at 31 March 2019. Inception: 8 December 2009.

Over the first quarter, we made the following portfolio changes:

  • We switched half of the notional US 5 Year Treasury position into Australian 10 Year Government bonds on a duration neutral basis and moved to a short Australian dollar position. With a benign central bank outlook; with low inflation and sluggish economic growth, as well as a downturn in housing prices - we see continued downward pressure on the economy and the Australian dollar in the short-term.
  • We also sold out of the Multi-Asset Volatility Strategy. The strategy is designed to perform well when volatility is low. However, due to our late cycle view, we see bouts of volatility to be more frequent going forward. Therefore, making this strategy vulnerable.
  • In March, we sold the remainder of the US 5-Year Treasury position, capturing the upside from the sovereign bond rally. Following this, as a means of offsetting the lack of defensiveness in the Fund, we sold a further 1% in the Australian dollar versus the US dollar.

The Fund remains well balanced between growth orientated asset classes like equities and more defensive allocations, particularly alternative forms of fixed income. Through enhanced diversification and overlay strategies designed to mitigate downside during material drawdowns, we are confident that the Fund will continue to exhibit a positively asymmetric return profile.

The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

Any past performance figures are not necessarily a guide to future performance.

Potential investors in Emerging Markets should be aware that investment in these markets can involve a higher degree of risk. Issued by Russell Investments Limited.

Some investments/bonds may not be liquid and therefore may not be sold instantly. If these investments must be sold on short notice, you might suffer a loss.