Russell Investment Group is looking at tailoring its multi-manager Irish-domiciled Alpha transport product for Australian superannuation funds in the second half of this year.
Russell launched a 19-manager Alpha Fund out of Ireland in March last year which currently has $US660 million in funds under management. The majority of those assets are Japanese and no Australian funds have invested in the product yet. The fund is a cash-plus which is not ideally suited to superannuation funds as they generally don’t have large allocations to that asset class but Symon Parish, Russell director of portfolio management, said the firm was examining how to structure it for the Australian market. “We have spoken to a few people here. We invest in a series of equity mandates then we hedge out the market risk with futures and currency forwards,” Parish said. Russell is now working on porting the alpha onto other local benchmarks and believes it would be best suited to bond indexes. The managers in the fund – which include Asian, US, Global and small and micro-cap managers – manage their funds as they normally would and Russell controls the market risk. Russell charges 40bp in addition to the underlying management fees. Alpha transport refers to the practice of porting alpha generated in one asset class onto the market return of another. It enables a fund manager to maximise returns and minimise risk. The fund is not suited to retail investors, Russell said.
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