At Russell Investments, we believe that skilled active managers have a high probability of outperforming passive alternatives over a market cycle and that disciplined manager research can identify skilled active managers. In fact, we have incorporated specific skill expectations into the capital markets assumptions that we use in constructing strategic asset allocations. These expectations include excess return, tracking error and correlation forecasts for all assets.
This paper discusses the importance of active manager skill and how adding return to a multi-asset portfolio via active management may actually reduce risk while improving returns. We validate our beliefs directly through an examination of our track record of identifying outperforming managers.
Why we believe in active manager skill and why we believe we can find it
Skill matters. We provide validation to our beliefs of having active manager skill and the success of our manager research.
By Leola Ross
Frank Russell Company owns the Russell Investments trademarks used in this material. See disclosures for details.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.