S&P Rates Russell Australian After Tax Fund As Four Stars And Russell Enhanced Income Shares Fund As Three Stars
Standard & Poor’s Fund Services today assigned its four-star ‘NEW’ rating to the Russell Australian After Tax Fund and its three-star ‘NEW’ rating to the Russell Enhanced Income Shares Fund.
x
The Russell Australian After Tax Fund is specifically targeted to superannuation investors. It has three layers, the foundation of which is the Russell Australian Shares Fund, which aims to deliver long-term returns by investing in a portfolio of Australian equities chosen by select investment managers and has been running since 1997. The After Tax Fund is managed according to a “tax-aware” strategy, rather than a “tax-driven” strategy. Russell has introduced tax considerations as an adjunct to its underlying investment method. Ultimately the criteria are intended to maximise after-tax alpha. We consider the tax-aware component of the fund to be comprehensive and effective.
“We also have a high regard for the manager’s multi-manager investment team and process. For this particular fund, portfolio manager Scott Bennett and tax consultant Raewyn Williams are experienced in their respective areas of responsibility. The fund does not have an adequate track record to provide a guide to its tax effectiveness as yet. However, the underlying Russell Australian Shares Fund has performed solidly, recording alpha consistently over a full market cycle and significantly outperforming in down markets,” said S&P Fund Services analyst Rodney Lay.
The Russell Enhanced Income Shares Fund is designed to provide both an enhanced level of income and total returns in line with its benchmark. The fund currently employs two active managers, Perennial Value Management and Ankura Capital, as well as investing in the Russell High Dividend Australian Shares ETF. All three are based on distinctive styles intended to provide greater income and price stability over a full market cycle. Over time, Russell will look to add to the manager line-up.
Mr. Lay said: “We have a high regard for the manager’s multi-manager investment process and the Australian-equities team, which has depth of experience, sufficient resources, and a solid performance track record. We have a similarly positive view on the portfolio manager directly responsible for the fund, Kathy Cave. However, the portfolio is still in a formative stage, with only two active managers, partly due to limited FUM, which restricts the ability to commission mandates tailored to the fund’s investment objectives. Our reservation is that the lack of strategic diversification may generate a level of income-volatility risk that compromises the ability to meet the needs of some of the targeted investor groups.”
x
The funds affected by this announcement are:
x
