Russell Investments has introduced to Australia its ‘OpenWorld’ investment platform of single managers – primarily boutiques – operating with high conviction in a variety of asset classes.
The OpenWorld platform, launched in the UK late last year, allows institutional investors to build their own alpha-generating portfolio within the one fund.
Alan Schoenheimer, Russell’s London-based chair for Asia Pacific and global head of the firm’s ‘Innovation Council’, said the platform should be of particular interest to industry funds and others which have been seeking alpha managers and new, sometimes difficult to access, investments.
The single managers per investment type generally sign up to performance fees, which typically total no more than 20 per cent of alpha after a hurdle.
“OpenWorld leverages our core capabilities in identifying emerging managers and putting it together in a format that investors want,” he said prior to the annual Russell client conference in Sydney and Melbourne last week.
Originally designed by Russell in Europe for private banks, the platform offers a big range of managers in esoteric strategies, such as global warming-themed funds, water, agriculture, micro cap, commodities momentum, dynamic bonds and single emerging and frontier markets funds. It also has high-conviction managers mandated to traditional strategies such as global equity value and growth.
Russell aims to expand the range of managers and strategies included on the platform over the next few years.
“The goal is to continually provide new opportunities for clients through the ongoing development of new products,” Schoenheimer said.
However, with OpenWorld, Russell has found that much of the interest has come from pension funds for which Russell is not the adviser.
“It’s aimed at people who have a mind of their own,” Schoenheimer said.
Russell’s Innovation Committee, which operates globally, has identified the firm’s core capabilities to suit the demand trends of investors.
Schoenheimer said the four key capabilities were:
. the ability to design and maintain indices
. asset allocation – from strategic to a new form of dynamic strategic asset allocation
. identifying winning managers, and
. efficient implementation.
Russell’s recent initiatives with asset allocation and implementation were outlined at the conference by Peter Gunning, Tacoma-based chief investment officer.
He said Russell was looking to be more active with its rebalancing rather than relying on automatic rebalancing once portfolios move above or below a target range, typically 3 per cent.
He also said the firm was progressing with its master manager strategies for some of its own funds and clients, whereby Russell takes over the buy/sell responsibilities from managers so that trades can be pooled and netted off to save in brokerage, market impact and taxation.