Asset allocation addresses advisors’ fixed income concerns amid rising bond yields, low interest rates
TORONTO–(BUSINESS WIRE)–Russell Investments Canada Limited (Russell Investments) has announced enhancements to the Russell Investments Fixed Income Plus Pool / Russell Investments Fixed Income Plus Class1 (‘Fixed Income Plus’) aimed at offering investors a total fixed income portfolio solution that emphasizes unique return-seeking strategies. The open-architecture solution provides investors with increased global bond exposure and greater geographical diversification, and it enables the management team to nimbly pivot strategies as economic and market opportunities present themselves.
“We designed and constructed Fixed Income Plus to address advisors’ real concerns to generate incremental returns, particularly in challenging markets,” said Greg Nott, senior director, head of Multi-Asset Canada at Russell Investments. “With this complete fixed income solution we expect advisers will be better equipped to help their clients find next-generation sources of return and achieve desired outcomes.”
Nott added that a single-ticket fixed income solution is particularly timely in the current market environment given the extremely accommodative policies of major central banks around the world. Accordingly, Fixed Income Plus leverages Russell Investments’ strategic selection of fixed income sub-advisers complemented by the firm’s proprietary strategies to create an actively managed solution – comprised of Core, Plus and Liquid Alternative components. The Core component invests in the popular Russell Investments Fixed Income Pool (45%), while the Plus (47%) and Liquid Alternatives (8%) components invest in specialized strategies designed to generate incremental returns. The Plus component’s strategic allocation targets the firm’s proprietary “fallen angels” strategy (13%), global credit (12%), securitized credit (11%), global government bonds (6%) and global convertible bonds (5%). The Liquid Alternatives component invests in the Picton Mahoney Fortified Income Alternative Fund, which is a long/short credit strategy.
“With yields at historic lows, there’s no time like the present to explore new geographies, asset classes and sectors to enhance returns,” Nott said. “Diversifying the range of fixed income securities in a portfolio can also help diversify equity risk at a time of uncertainty and increased volatility. We are working diligently to expand the range of opportunities in Fixed Income Plus, including the incorporation of strategies that retail investors could not previously access.”
For example, the added strategies include:
- Liquid Alternatives: Daily tradable mutual funds that engage in activities such as long-short credit. These strategies invest in bonds that have credit and interest-rate exposure. They also aim to mitigate capital losses through shorting and other hedging strategies.
- Fallen Angels: A sub-set of high-yield securities that have lost their investment grade status after the issuer was downgraded but as a result offer attractive opportunities to add future value.
- Securitized credit: Financial securities created by pooling different asset-backed debt instruments such as mortgages and loans.
Formerly known as Multi-Asset Fixed Income (and Class), the Fixed Income Plus Pool (and Class) offers lowered management fees. Series F management fees were reduced in February 2021 to 0.55% from 0.60%, while Series B and B-3 management fees were reduced from 1.35% to 1.30%. Meanwhile, the pool’s low-risk level classification and competitive fee structure have been maintained.
The Russell Investments Fixed Income Plus Pool is part of the firm’s set of core fixed income solutions, which also includes the Russell Investments Short-Term Income Pool and Russell Investments Fixed Income Pool.
About Russell Investments Canada Limited
Russell Investments Canada Limited is a wholly owned subsidiary of Russell Investments Group, Ltd. Established in 1985, Russell Investments Canada Limited has its head office in Toronto.
About Russell Investments
Russell Investments is a leading global investment firm providing tailored solutions and services to institutions and individuals through financial intermediaries. Russell Investments is dedicated to improving people’s financial security, leveraging an 84-year client-centric heritage rooted in investment innovation. Russell Investments is the fourth-largest adviser in the world with CA$412.3 billion in assets under management (as of 12/31/2020) and CA$3.4 trillion in assets under advisement (as of 6/30/2020) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments operates through 18 additional offices in major financial centers such as New York, London, Tokyo, Toronto, and Shanghai.
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.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Diversification and strategic asset allocation do not assure a profit or protect against loss in declining markets.
¹Formerly Multi-Asset Fixed Income and Multi-Asset Fixed Income Class
Russell Investments is the operating name of a group of companies under common management, including Russell Investments Canada Limited.
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