Russell Investments Canada expects smaller companies to lead rally as market
recovery continues

New Russell Smaller Companies Pool offers enhanced return potential and third-party multi-manager small cap line-up

Click here to learn more and to see money manager videos of Alex Lane, Vice-President & Portfolio Manager at Goodman & Co. Investment Counsel, Chris Guthrie, President and CEO of Hillsdale Investment Management Inc. and Sadiq Adatia, CIO of Russell Investments as they discuss the new Russell Smaller Companies Pool.

TORONTO, Nov. 2 /CNW/ - As the capital markets rebound, Russell Investments Canada Limited (Russell) wants to ensure that investors are well-positioned to take advantage of the recovery with the enhanced return potential of the newly launched Russell Smaller Companies Pool.

"As the recovery continues, we expect smaller companies to lead the rally—just as they have in the past. For instance, small cap stocks outperformed the broader S&P/TSX Composite Index by over 10% annualized for the 24 months after the last recession in the 1990s," says David Feather, President and Managing Director at Russell.

"The small cap sector features relatively low valuations and attractive growth prospects. The Russell Smaller Companies Pool is an effective way for investors to capitalize on this. We intend to uncover significant opportunities for investors by combining the unique and complementary investment styles of two best-of-breed small cap managers in one fund."

What sets the Russell Smaller Companies Pool apart from most other small cap funds?

The Russell Smaller Companies Pool focuses on companies with a market capitalization of less than CDN$3 billion. The Pool is designed for investors who want to participate in the higher return potential of a dynamic asset class as the global economy recovers. The Pool is ideal for those who are interested in adding risk-reducing diversification to large cap equity holdings.

Sadiq S. Adatia, Chief Investment Officer at Russell and the lead portfolio manager of the Russell Smaller Companies Pool, explains how the Pool's allocation to foreign small cap stocks makes it stand out from the crowd.

"To take advantage of global opportunities, the Pool offers up to 49% exposure to smaller cap stocks outside of Canada - depending on market conditions. In comparison, the average small cap/mid cap mutual fund in the Morningstar Canada Universe has 8.0% in foreign equity holdings, "says Adatia.

"As such, investors will see opportunities come from both the global and Canadian small cap components versus other more traditional Canadian-only offerings."

Russell's multi-manager process 

The sub-advisers of the Russell Smaller Companies Pool were selected using Russell's disciplined and time-tested process to analyze manager style, performance, and consistency. The Pool combines two sub-advisers with distinct and complementary styles: Hillsdale Investment Management (Hillsdale) and Goodman & Company (Goodman).

"The small cap manager market has traditionally not been a heavily researched space in the past. However, Russell used its manager research resources and due diligence in order to identify two sub-advisers that have the potential to provide great value and risk reduction in the new Pool. This multi-manager structure combines Goodman's fundamental style with Hillsdale's quantitative-oriented style, resulting in a well-diversified Pool," explains Adatia.

"Goodman is focused on the fundamentals, talking to company management, understanding sources of growth, and providing in-depth research on the companies they invest in. Hillsdale Investment Management is a quantitative manager and is focused more on the underlying numbers, analyzing the data and researching a large universe of stocks to find the best companies to invest in."

Investors seeking the potential for higher returns and deeper diversification can invest in the Russell Smaller Companies Pool directly, or as part of the Russell Sovereign Investment Program or the Russell LifePoints Portfolios. For investors with holdings outside of their RRSPs, Russell Corporate Class offers an opportunity to maximize after-tax income through the Russell Smaller Companies Class.

To learn more about the Russell Smaller Companies Pool or interview its portfolio manager, Sadiq Adatia, please contact Thien Huynh at: 416-640-2529 or [email protected]

About Russell Investments

Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. The firm has C$153.2 billion in assets under management (as of September 30, 2010) in its mutual funds, retirement products, and institutional funds.

Russell Canada was recently named the #1 fastest growing money manager in Benefit Canada's 2010 Top 40 Money Managers Report. For more information about how Russell helps to improve financial security for people, visit us at www.russell.com/ca.

Important Information

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.

Nothing in this publication is intended to constitute legal, tax securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. This is a publication of Russell Investments Canada Limited and has been prepared solely for information purposes. It is made available on an "as is" basis. Russell Investments Canada Limited does not make any warranty or representation regarding the information.

Russell Investments and the Russell Investments logo are registered trademarks of Frank Russell Company, used under license by Russell Investments Canada Limited.

Copyright © Russell Investments 2010. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments.

For further information:

Thien Huynh Katita Stark	416-640-2529 416-929-9100
For real-time news updates, follow @Russell_News on Twitter.