Russell Investments is predicting a major step-change in the way Australian institutions approach their investment challenges in the coming decade – forecasting a flood of demand for outcome oriented, multi-asset investment solutions.
Russell’s Asia-Pacific Chief Executive Alan Schoenheimer said Australian institutional and adviser clients were rethinking their strategic approach in the wake of the GFC and heightened demand for effective investment and retirement income solutions.
“Our clients are telling us they want investment solutions that start with the individual needs of their end investors, and one big theme getting these clients excited is the idea of solutions that provide equity like returns but without the volatility of the sharemarket,” Mr Schoenheimer said.
“This holy grail of returns with less risk is now possible due to exciting new product innovations in the multi-asset space.”
In response to local demand, next month Russell plans to launch the first in a series of new multi-asset solutions. The first solution is specifically designed for institutional investors that want competitive returns but can’t stomach traditional market volatility.
The solution aims to provide equity like returns at two thirds the volatility of equity portfolios. Russell has already had strong interest in the concept from insurance companies, defined benefit funds, not for profits and superannuation funds seeking a retirement solution for members.
“We are evolving our product offering and will be working with key clients to build customised solutions from the ground up to meet their needs. Very few asset managers have the depth and breadth of capabilities to build and actively manage outcome oriented multi-asset portfolios in the way that Russell can,” he said.
The Australian multi-asset solution is being developed following a slew of new multi-asset partnerships the firm cemented with major global institutions, not for profits, corporate funds and retail investor groups in 2012, building its multi-asset funds under management to over $100 billion.
Russell’s multi-asset portfolios in Australia are already delivering investor outcomes. According to the latest Chant West Customised Performance survey, five out of six Russell multi-asset portfolios achieved first quartile performance for the five years to February 2013, with the sixth portfolio second quartile.
Local realignment, search for new Institutional leader
Supporting the global evolution at Russell, Mr Schoenheimer today reinforced the structure of the Australian business which includes three core client facing divisions and the search for a new leader of the Institutional business:
- Institutional – focused on servicing super funds and other large investors, the institutional business is actively seeking new alliances with investors to build customised multi-asset funds, or align them with Russell’s existing suite of outcome driven multi-asset solutions. In a major change for the group, the Institutional business will now incorporate Russell’s Consulting business as well as Russell’s longstanding Actuarial team, which is an industry leader in the superannuation space. Russell is also conducting a global search for a new Managing Director, Institutional, to drive relationships with local insurance companies, industry funds, non profits and corporate funds following the decision by Michael Clarke to pursue a new role outside the firm. Mr Schoenheimer thanked Mr Clarke for his commitment to further developing Russell’s institutional relationships, particularly in the industry fund space.
He said an ongoing opportunity for Russell was to highlight to local institutions the full power of the Russell proposition: The successful candidate would be critical in building Russell’s alliance approach by working with a much broader set of institutional clients in the development of outcome oriented solutions. - Private Client Services – like its Institutional counterpart, Private Client Services will drive Russell’s expansion in the advice market, partnering with dealer and adviser groups to provide tailored outcome oriented solutions. Earlier this year Russell unveiled a major retail alliance with Australian financial planning group Matrix. The team will be lead by Siva Sivakumaran, Managing Director, Private Client Services. Mr Sivakumaran was previously Russell’s director, Infrastructure.
- Investment Division – a broader investment division will be the engine room for the Institutional and Private Client businesses, custom manufacturing and managing multi-asset solutions for clients. Russell’s global investment team continues to expand as part of a push to lead the world in multi-asset solutions. Locally the Australian Investments team will be lead by Chief Investment Officer Symon Parish and supported by a broad team of investment professionals offshore and in Australia including Sydney-based Managing Director and Portfolio Manager Multi-Asset Solutions, Andrew Sneddon, and Senior Investment Strategist Asia Pacific, Graham Harman.
- The Investments business also incorporates Russell Implementation Services (RIS) which offers conflict free, investment management driven transition management services across interim portfolio management, portfolio emulation, overlay services and FX agency trading.
In addition to focusing on investment product innovation, Mr Schoenheimer said the revised structure – which reflects changes across the firm globally – would see the asset consulting service being integrated into the institutional business.
“Today, Russell is first and foremost an asset management firm. We have taken the decision to remove the ‘barriers’ between our consulting (advice) and institutional (asset management) teams, as we no longer believe this old world structure best serves our clients.
Russell will continue to seek consulting relationships. But under the new structure, all clients will have unfettered access to Russell’s full breadth of capabilities, whether that is through the consulting, institutional or private client businesses.
The industry has evolved, and Russell has evolved its structure and service proposition as a result.”