Russell Investments expands tax-managed fund offerings and enhances strategic asset allocation in tax-managed model portfolios designed to help investors achieve higher after-tax returns
New Russell Tax-Managed International Equity Fund and Russell Tax Exempt High Yield Bond Fund join Russell Tax-Managed Model Strategies, boosting each model’s allocation to tax-aware funds to greater than 90%
SEATTLE, June 1, 2015
In an effort to provide financial advisors with multi-asset investment solutions that seek to deliver higher after-tax returns to their clients, global asset manager Russell Investments has expanded its tax-managed fund line-up with the introduction of the Russell Tax-Managed International Equity Fund and the Russell Tax Exempt High Yield Bond Fund. The two new funds will be incorporated into Russell Investments’ Tax-Managed Model Strategies in June as part of an overall strategic asset reallocation of the five model portfolios that will result in each model portfolio’s allocation to tax-aware funds exceeding 90%.
“Tax management is an important topic for investors and, for more than three decades Russell Investments has provided tax-aware investment solutions that help advisors and their clients minimize their tax exposure and maximize their investment dollars,” said Phill Rogerson, managing director, consulting and product, for Russell Investments’ U.S. advisor-sold business. “With investors and their advisors more focused than ever on outcomes such as financial security in retirement, every dollar saved in taxes is one that can be put toward an investor’s goals. It’s precisely for this reason that we expanded the suite of investment solutions that can help investors grow their after-tax wealth more efficiently.”
For advisors looking to help clients grow after-tax wealth, Russell Investments offers several ways to access its tax-managed capabilities, including:
- Total portfolio solutions (Russell Tax-Managed Model Strategies)
- Individual funds focused on U.S. large cap, mid and small cap, and tax exempt bonds, as well as the two new funds focused on international equities and tax-exempt high yield
The new Russell Tax-Managed International Equity Fund is currently one of the only tax-managed, multi-manager international equity mutual funds available to investors. It seeks to deliver long-term capital growth on an after-tax basis, and invests principally in depositary receipts and equity securities issued by companies economically tied to non-U.S. countries in both developed and emerging markets. Jon Eggins, senior portfolio manager at Russell Investments, manages the new fund, which employs a range of tax-management strategies, including managing holding periods and yield, tax-lot swapping, tax-loss harvesting, minimizing wash sales and more, as appropriate.
“Tax-managed investing today is more than just municipal bonds and U.S. stocks. It’s now available globally,” said Eggins. “Developed and emerging markets are accessible in one fund, which provides uncommon tax-managed access to emerging markets. Typically it is more tax-efficient to combine sub-asset classes that are not perfectly correlated, as it increases opportunities for tax-loss harvesting in one to offset gains in another.”
The Russell Tax Exempt High Yield Bond Fund is a multi-manager fund providing access to tax-exempt high yield municipal debt securities. Kevin Lo serves as portfolio manager for the fund, which recognizes that high yield bonds have historically produced tax-equivalent returns similar to equities at half of the volatility, albeit with some increased risk, and is designed to create an opportunity for higher tax-exempt income by investing 30-60% of its assets in municipal bonds that are ‘below investment grade.’ The primary purpose of the fund is to provide a high level of current income that is tax-exempt, but it will also focus on providing total return.
Strategic Asset Reallocation in the Russell Tax-Managed Model Strategies
Russell Tax-Managed Model Strategies offer broad diversification, access to some of the world’s leading managers and strategies, and dynamic portfolio management. The strategic asset reallocation of the portfolios, effective June 1, will increase the tax-efficiency design of the models via allocations of between 91% and 96% to tax-aware funds, depending on the model strategy.
In part, this will be accomplished via the addition of the two new funds, the Russell Tax-Managed International Equity Fund and Russell Tax Exempt High Yield Bond Fund:
- The Russell Tax-Managed International Equity Fund will replace the Russell International Developed Markets Fund and the Russell Emerging Markets Fund.
- The Russell Tax Exempt High Yield Bond Fund will replace the Russell Global Opportunistic Credit Fund.
The Russell Global Infrastructure Fund is also being added to the Russell Tax-Managed Model Strategies to potentially enhance return and contribute to portfolio diversification.
“The reallocated Russell Tax-Managed Model Strategies represent our best thinking on tax-aware total portfolio solutions and are rooted in Russell Investments’ globally diversified, multi-asset investment approach,” explained Rogerson. “This asset allocation is optimized with our enhanced portfolio implementation strategy in the tax-managed equity funds, allowing for trading efficiencies, as well as enhanced tax-management capabilities across the portfolio, including addressing the concerns of capital gains associated with trading single manager funds. Ultimately, we aim to deliver the end investor with a disciplined approach to managing taxes that can help them achieve their investment outcomes.”
About Russell Investments
Russell Investments is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell Investments stands with institutional investors, financial advisors and individuals working with their advisors—using the firm's core capabilities that extend across capital market insights, manager research, asset allocation, portfolio implementation and factor exposures to help each achieve their desired investment outcomes.
Russell Investments has more than $272 billion in assets under management (as of 3/31/2015) and works with more than 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell Investments has $2.4 trillion in assets under advisement (as of 12/31/2014). The firm has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell Investments also traded more than $1.7 trillion in 2014 through its implementation services business.
Headquartered in Seattle, Washington, Russell Investments operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Milan, Dubai, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, Milwaukee and Edinburgh. For more information about how Russell Investments helps to improve financial security for people, visit russellinvestments.com or follow @Russell_Invest.