8 / 16
Russell Investments Communiqué
p / 8
6
See “Making good on the promise of
multi-asset investing” in the Q3 2013
edition of Communiqué.
STRATEGY
TIMING IMPLEMENTATION
CLIENT FOCUS
The evolution of multi-asset
By: Rob Balkema CFA, Senior Portfolio Manager and Leah Fuhlbrugge, CFA, Portfolio Analyst
Multi-asset investment products seem to be everywhere
these days; a sign of their current appeal is that the label is
being applied to all sorts of products, including a few that two
years ago would more likely have been called “core plus fixed
income” or “global equity.”
As multi-asset portfolio managers, we believe the increased interest is a natural response
to the low-return environment we find ourselves in, and to investors’ increased focus
on specific outcomes such as improving funded status or meeting spending targets.
Investors cannot afford to ignore sources of return, cannot afford to take risks they do
not believe will be rewarded and must be as efficient as possible in the implementation of
their strategies. Multi-asset investment products can help on all of these fronts.
DESIGN: GETTING EXPOSURE TO THE THINGS IN-BETWEEN
Three years ago, we presented to the Russell Investments Institutional Summit on the
subject “making good on the promise of multi-asset investing.”
6
This year, we were back
to present on “the evolution of multi-asset.” If truth be told, much of what we said three
years ago still applies: the benefit of clear objectives, the importance of a total portfolio
view and the need for a dynamic approach. But the products we launched in 2012 now
have four years behind them, and the way the strategy is being managed in practice has
evolved.
In terms of the design of multi-asset portfolios, true multi-asset is built on a foundation of
a diverse range of exposures to assets and strategies, each of which plays a precise role
in meeting a client’s desired outcome. Some of these asset classes cannot easily fit into a
traditional portfolio built from a series of asset classes or product sleeves, each selected
by the asset owner. Most often, this is because some asset classes or exposures are not
modeled in a typical set of long-term capital market assumptions, or because a quarterly
investment committee meeting cycle does not allow enough time for new strategies to be
properly researched or understood. The largest institutions not included, it’s impossible
to effectively select, track and manage separate exposures to the full range of return
opportunities (e.g., exposures such as global infrastructure, global REITS, commodities,
global high yield, bank loans, emerging market debt, volatility and currency – all of which
now feature in our flagship U.S. multi-asset products). In a world with such a range of
choices, getting the best thinking in strategic asset allocation into portfolios in a timely
manner is a key benefit of the multi-asset approach.
Rob Balkema
Leah Fuhlbrugge