Throughout calendar year 2013, Zenith has observed a greater disparity in investment outcomes amongst managers operating within the diversified market segment. Zenith attributes this to the varying degree of evolution in active asset allocation and implementation practices, as sector participants have sought to improve portfolio durability amidst an increasingly complex and dynamic investment landscape. Notwithstanding the volatility observed across various asset classes, sector participants have cited the existence of fewer directional trade opportunities upon which to capitalise. As a consequence, this has seen managers place greater emphasis on the identification of relative-value opportunities and the extraction of alpha through the incorporation of discrete investment strategies and manager selection. Fears of a rising-interest-rate environment have also weighed on asset-allocation decisions, with many sector participants moving away from traditional longer-dated fixed interest allocations in favour of low-duration exposures.
Winner: Russell Investment Management
Zenith says: Russell Investment Management (Russell) offers a suite of diversified funds that are designed to provide investors with exposure across income, growth and alternative asset classes and investment strategies. Catering to the needs of investors with a range of risk/return preferences, Zenith believes these funds are amongst the strongest investment propositions available to investors seeking a locally distributed multi-asset solution. Russell boasts one of the largest and most geographically diverse investment teams within Zenith’s rated investment universe. With collective multi-asset skills unrivalled by many of its peers, we consider this to be a central factor driving our overall conviction. Responsibility for Russell’s Australian-based diversified strategies continues to rest with Andrew Sneddon, a highly regarded investment professional who brings broad-based expertise that is deemed complementary to their management. A senior member within Russell’s multi-asset solutions team, Zenith believes Sneddon has been instrumental in Russell’s evolution and remains integral to its forward success. Russell’s investment process has been designed to provide the multi-asset team with ample scope to generate returns through multiple alpha sources. The fund’s portfolio is constructed through a multi-manager approach, and is strongly focused on leveraging Russell’s global networks and broad menu of investment capabilities. Highly scaleable in nature, the process has been further enhanced through the incorporation of derivatives in setting its enhanced asset allocation (EAA) strategies, and the completed rollout of Risk Metrics, a global multi-asset risk management platform. The latter represents a realisation of several years of development and significant investment by the firm in its performance, attribution and risk management capabilities, firmly placing Russell ahead of peers when considered in a multi-asset context.
Interview:
Five years ago, at the height of the global financial crisis, the way Russell manages money completely evolved.
The firm implemented a new strategic asset allocation policy for its multi-manager funds and adopted a three-pronged investment approach based on design, construction and management.
That approach has seen Russell’s five main diversified funds beat their benchmark for the past five years. For the year to September 30, 2013, four funds outperformed by more than 2 per cent.
The Russell Growth Fund and High Growth Fund outperformed by more than 2.8 per cent.
In May, Russell launched its new multi-asset growth strategy (MAGS), which is run by portfolio manager Andrew Sneddon and designed to meet the growing demand for sustainable growth with lower volatility. The fund invests in a diversified range of assets including equities, fixed income and alternatives, with an actively managed asset allocation policy. It aims to deliver “equity-like returns, with lower volatility”.
According to Sneddon, Russell recognised early that the world had changed, which required it to change its investment strategy.
“Prior to the GFC, the world was in a high-return, low-volatility environment. But since 2008, it has been a low-return, high-volatility world, and under those conditions we’ve managed to be successful,” he says.
– Leng Yeow
Finalists:
– Perpetual Investments
• A highly regarded local investment team whose members possess superior levels of technical competency and quantitative skill.
• An investment process that is subject to continuous enhancement, providing the manager with sufficient flexibility to enact best ideas.
• A proprietary and market-leading approach to portfolio construction, including the use of smart beta and other alternative investment strategies.
– Schroder Investment Management Australia
• A high regard for the locally domiciled investment team which is able to leverage a network of global analysts for additional insights.
• A robust and repeatable investment process that operates within a sophisticated risk framework.
• An active and unconstrained approach to asset allocation – one that has shown to have application through varied market conditions.
