Russell Investments has launched a new mutual fund that will pursue a commodities strategy with the aim of delivering portfolio diversification and exposure to the long-term performance of global commodity markets.
The Russell Commodity Strategies Fund is built on Russell’s strong heritage in portfolio management and investment research, including decades of industry-leading investment manager research and capital markets insight.
The new fund is the first US multi-manager mutual fund with a specific commodities mandate. Russell initiated the fund, which is consistent with the firm’s multi-manager, multi-style investment approach, by bringing together two investment managers from separate investment management firms with extensive commodities experience – Credit Suisse Asset Management and Goldman Sachs Asset Management. Both managers have tailored mandates in order to meet the fund’s investment objective.
“In the continued search for better diversification and broader global opportunities, some investors are looking beyond traditional markets to commodities and real assets,” says James Ind, portfolio manager at Russell. “While volatile on their own, when included as a small part of a well-diversified portfolio, a commodities strategy has the potential to lower a portfolio’s overall long-term volatility. Russell already offers commodities strategies to clients in other markets around the world as well as US foundations and endowments, and now we can provide US retail clients with the opportunity to invest in these strategic assets.”
Russell has added the Commodity Strategies Fund as a new underlying fund to its asset allocation strategies, including LifePoints Funds, Target Date Series and Target Portfolio Series. The fund also is available as a standalone fund for those advisors who wish to provide their clients with exposure to energy, industrial metals, livestock, precious metals, grains and softs.
“Russell has long been at the forefront of providing thoughtful innovation to its asset allocation products by offering new funds, expanding global access and adjusting portfolio allocations when we believe it is appropriate to do so,” says Tim Noonan, managing director for capital markets insights for Russell’s private client services business. “The inclusion of the Russell Commodity Strategies Fund is the latest statement of our belief that investment risk can be best managed by diversifying across asset classes, across investment styles and across investment managers.”
The new commodities strategy fund will invest in commodities-linked securities, derivative instruments, cash and fixed income securities that together are intended to provide clients with exposure to the performance of the collateralized commodity futures markets. In addition, the fund will invest in a wholly-owned offshore subsidiary that will invest in commodity-linked swaps and other investments in which the fund cannot directly invest for tax reasons.
“Much of the money following commodities is invested systematically through passive vehicles,” says Ind. “This leaves good opportunities for commodity managers to identify and potentially take advantage of market inefficiencies and active trading opportunities. We have designed this fund to use several approaches which together seek out distinct opportunities for performance while maintaining a strong risk management profile.”