Canadian investment managers bullish on the loonie and Canadian equity markets, bearish on bonds



    Little Enthusiasm for Canadian Real Estate and the Telecom Sector

    TORONTO, June 28 /CNW/ - Over 50 percent of Canadian investment managers
are now bullish on the Canadian dollar compared to 25 percent a quarter ago,
according to the latest Russell Investment Manager Outlook, a quarterly poll
of Canadian investment managers conducted by Russell Investments Canada.
    "The majority of Canadian investment managers surveyed have high
expectations for the Canadian dollar, believe the Canadian equity market is
fairly valued and are generally bullish on equities," said Tim Hicks, Chief
Investment Officer, Russell Investments. "Overall 68 percent of managers
believe the Canadian equity market is fairly valued, which is 19 percent
higher than a year ago."
    "Meanwhile, sentiment for the bond market turned sharply negative in the
second quarter and the number of bullish bond managers fell 24 percent to just
six percent," said Hicks. "With yields rising on government-issued bonds,
high-yield bonds may continue to struggle."
    Added Hicks, "These changes are likely due in part to the continued
strength of the Canadian economy, the persistence of inflationary signals and
strong hints from the Bank of Canada that further rate hikes are in the
offing. Our third quarter survey results in September should indicate the
future for interest rates and reveal whether or not fixed income pessimism is
here to stay."

    Additional key findings include:

    Private Equity Deals: Although private equity deals have been grabbing
headlines, by a ratio of about two to one, investment managers are concerned
about extreme valuations, excessive leverage and a general lack of appealing
trading opportunities. Managers were evenly split on whether these deals are
having a positive or negative effect on corporate restructurings.

    Real Estate: Two-thirds of investment managers showed little enthusiasm
about the Canadian real estate sector. "There has been so much publicity
regarding the glut of supply and high-risk mortgage lending problems in the
U.S.," said Hicks, "and with the strong likelihood of higher financing costs,
both south and north of the border, managers are more bearish about Canadian
real estate."

    Sector Highlights: Sentiment for the telecom sector also deteriorated
significantly with bullishness dropping from 65 percent to 39 percent of
managers who see little remaining upside potential for the telecom sector.
    Bullishness towards the energy sector surged from 24 percent to
55 percent. In Russell Investments' previous survey, more than half of the
investment managers said energy prices were the single biggest threat to the
Canadian equity market. Given their current bullishness on the energy sector,
managers appear to be in agreement with the Bank of Canada's high growth
outlook.

    Non-Canadian Equity Markets: managers remain bullish on EAFE equities
which increased from 64 percent to 68 percent, despite several European
central banks raising interest rates and others appearing ready to do so.
Although volatility was relatively high in world equity markets, managers
judged the market as having a solid fundamental footing. A reversal in trends
from the last quarter appeared in attitudes towards U.S. equities as
bullishness dropped from 58 percent to 41; bearish attitudes rose from
14 percent to 27 percent.

    About Russell Investment Manager Outlook

    Prior to the end of each quarter, Russell Investments Group polls a
sample of investment managers to collect their top-line opinions about the
direction of the markets, sectors and asset classes to watch, and trends on
the horizon that could impact investment strategy. In addition to the
quantitative results, the Investment Manager Outlook provides qualitative
analysis and commentary from one of Russell's senior investment strategists.
Detailed results and analysis from the Russell Investment Manager Outlook are
available on Russell.com/ca. Russell conducted the current Russell Investment
Manager Outlook between May 31 and June 6, 2007. The manager research that
Russell conducts for investment purposes is done entirely independent of
Russell Investment Manager Outlook, and responses to the survey are on a
purely voluntary basis. Thirty-four (34) managers responded.

    About Russell

    Russell Investments Group is a global leader in multi-manager investing
and one of the world leaders in investment consulting. Russell advises
institutional clients with total assets of over C$2.0 trillion and manages
more than C$230 billion in its investment management business, which employs
Russell's MULTI ASSET MULTI STYLE MULTI MANAGER(R) investment process.
    Russell Investments Group supports its global operations by monitoring
more than 4,000 manager firms and their 8,600 products. The company serves
institutional and individual investors with a full range of investment
services, including investment consulting, investment funds which include
private equity and hedge funds, transition management, commission recapture
and stock indexes. Founded in 1936, Russell has its headquarters in Tacoma,
Washington, USA and has principal offices in Toronto, New York, London, Paris,
Sydney, Singapore, Auckland, and Tokyo. Russell Investments Canada Limited is
a wholly-owned subsidiary of Frank Russell Company. For more information,
please go to www.russell.com/ca.

    Russell Investment Group is a registered trade name of Frank Russell
    Company, a Washington, USA corporation. It operates in Canada through its
    subsidiary Frank Russell Canada Limited. Frank Russell Company is a
    subsidiary of The Northwestern Mutual Life Insurance Company.

    Commissions, trailing commissions, management fees and expenses all may
    be associated with mutual fund investments. Please read the prospectus
    before investing. Mutual funds are not guaranteed, their values change
    frequently, and past performance may not be repeated.





For further information:

For further information: Catherine Winchell, (416) 640-6899; Katita
Stark, (416) 929-9100

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