New white paper assesses yield and interest rate dilemma facing Canadian investors - recommends an active, unconstrained approach to fixed income investing to complement traditional approaches.
TORONTO, Oct. 2, 2014 /CNW/ - A recent study released by Russell Investments Canada Limited (Russell Canada) - "Fixed Income – Unconstrained" – takes a fresh look at global fixed income markets and recommends a more active and dynamic approach to investors' fixed income portfolios.
The report, authored by Shailesh Kshatriya, associate director, client investment strategies at Russell Canada, suggests that while bonds continue to play a pivotal role in reducing overall portfolio volatility, the current environment presents an opportunity for Canadian investors to take an "unconstrained" approach. This new approach removes domestic barriers imposed by a traditional benchmark, allowing skilled investment managers to capitalize on their best ideas globally and may be more suitable for protecting principal. This approach can be an effective complement to an existing core fixed income holding or act as a strong diversifier within a multi-asset portfolio.
"We believe traditional active strategies which aim to outperform a broad fixed income benchmark can be complemented by a dynamic and unconstrained approach," said Kshatriya in the new report. "Russell Canada believes an absolute return-oriented fixed income strategy may help generate more consistent returns in a secular rising rate environment by allowing manager skill and "alpha" to be the primary return drivers."
The report goes on to stress the importance of diversifying more broadly into global bonds and sectors as well as into new currency approaches. Kshatriya describes the diversification challenge facing today's domestically focused Canadian fixed income investors, magnified by high corporate issuer concentration and the fact that Canada represents less than 3% of outstanding global debt1.
The report concludes by detailing aspects of a credit- and duration-agnostic, total return approach to fixed income investing and providing simple scenario analysis. In summary, using an actively managed approach can effectively position a fixed income portfolio to navigate both higher and lower interest-rate expectations.
In addition to its 5-star rated Russell Fixed Income Pool2, Russell Canada is committed to providing investors with a comprehensive suite of fixed income solutions. These include a range of funds, a suite of high quality investment tools, research and resources for clients. Recently, Russell Canada completed a series of enhancements to its Russell Core Plus Fixed Income Pool intended to offer clients a more diversified fixed income approach. Renamed the Russell Global Unconstrained Bond Pool3, the Pool now includes new sub-advisers, an expanded investment mandate and a Russell positioning strategy.
You can get a full copy of the study here.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell stands with institutional investors, financial advisors and individuals working with their advisors—using the firm's core capabilities that extend across capital market insights, manager research, portfolio construction, portfolio implementation and indexes to help each achieve their desired investment outcomes.
Russell has more than $298.0 billion Cdn in assets under management (as of 6/30/2014) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 6/30/2013). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.6 trillion in 2013 through its implementation services business. Russell also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities. Approximately $5.2 trillion in assets are benchmarked (as of 12/31/2013) to the Russell Indexes, which have provided investors with 30 years of smarter beta.
Headquartered in Seattle, Washington, Russell operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, San Diego, Milwaukee and Edinburgh. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.
1.Source: BIS, Russell Investments. Data as of December 2013.
2.Source: Morningstar. Based on Russell Fixed Income Pool, Series F.
3.Commissions, trailing commissions, management fees and expenses may all 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.
Indexes and/or benchmarks are unmanaged and cannot be invested in directly. Past performance is not indicative of future results.
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Russell Investments Canada Limited is a wholly owned subsidiary of Frank Russell Company and was established in 1985. Russell Investments Canada Limited and its affiliates, including Frank Russell Company, are collectively known as Russell Investments.
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RETAIL-2014-09-25-0961 Exp. 09/2015
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SOURCE: Russell Investments Canada Limited
For further information: Catherine Winchell, 416.640.6899; Beja Rodeck Communications, 905.885.5945