Russell Investments has launched an Australian institutional fund aimed at the growing “outcome-orientated” investment market, investing across a broad range of asset classes and sub-classes in a benchmark-unaware fashion. A similar fund has been run in the UK for just over three years.
Andrew Sneddon, a managing director and portfolio manager, told the Russell annual client conference in Sydney last week that the fund, Multi-Asset Growth Strategy (MAGS), said the fund had no fixed asset allocation but at launch just prior to the conference it held about 50 per cent equities.
“It could go up to 100 per cent equities,” he said. “We’re continually adapting portfolio positioning to take advantage of opportunities and avoid risks in the evolving market environment. We aim for equity-like returns but with lower volatility.”
The UK experience, admittedly with different country exposures, had done that in the past three years, he said, returning about 101 per cent of the equity market and only about 60 per cent of equity’s volatility.
Alan Schoenheimer, the Russell chief executive for Asia Pacific, said that three themes being addressed by Russell were outcome-orientated, multi-asset portfolios and actively-managed portfolios. The consensus from all speakers during the conference was that beta returns are likely to be lower going forward than in the recent past, putting greater focus on obtaining alpha returns.
Schoenheimer said that because of changes in markets, more asset classes were required to deliver diversification. For instance, 20 years ago emerging markets had a correlation with the US market of only 0.3 or 0.4; today, it is closer to 0.8 or 0.9.
He described MAGS as “the best that Russell has to offer”.