Russell Investments Canada has launched the Russell Real Assets Portfolio for Canadian investors seeking diversification beyond traditional stocks and bonds, as well as increased exposure to potential global growth opportunities.
The new portfolio complements Russell’s existing suite of multi-asset solutions by offering investors an opportunity to invest in an actively managed, one-stop diversified fund that offers exposure to investments that until recently had been difficult for individual investors to access, such as infrastructure, real estate, commodities and real return bonds.
"Institutional investors have expanded their use of real assets as a source of potential yield enhancement as well as a way to diversify their portfolios," says David Feather, president and chief executive officer, Russell Investments Canada. "Individual investors will have the opportunity to obtain similar benefits through the Russell Real Assets Portfolio."
"Real assets" are physical assets like land, bridges, gold and timber, which have an intrinsic value that comes from their properties or the worth of their components. This characteristic helps to reduce the volatility of these assets regardless of the market environment, which means real assets could react to market events in a very different manner than financial assets do, and can help provide investors with tangible diversification benefits beyond the traditional stocks and bonds that make up a typical investor’s portfolio.
"Investors who are looking for alternatives to traditional stocks and bonds should consider investing in real assets," says Greg Nott, chief investment officer for Russell Investments Canada. "An allocation to these asset classes can give investors a means to diversify their portfolios while also giving them exposure to some of the world’s fastest-growing economies."
The new Russell Real Assets Portfolio includes an allocation to the following:
Russell Global Infrastructure Pool
The Russell Global Infrastructure Pool’s objective is to provide long-term growth of capital and current income primarily through exposure to equity and fixed-income securities issued by companies that are involved in, or indirectly benefit from, the development, maintenance, servicing or management of infrastructure. The pool is sub-advised by two experienced global infrastructure managers, each bringing complementary investment strategies. Colonial First State Asset Management Australia is a specialised infrastructure manager with a slightly GARP (growth at a reasonable price) approach. Nuveen Asset Management focuses on companies that are not just in the traditional infrastructure sectors such as airports, ports, shipping, toll roads, pipelines and utilities, but also in public transportation, renewable energy and environmental services.
Russell Global Real Estate Pool
The Russell Global Real Estate Pool invests primarily in real estate investment trusts (REITs) and other REIT-like entities that own interests in real estate around the world, including retail, office, apartment, industrial, hotel and specialty property sectors. It is sub-advised by two experienced global real estate managers, each bringing complementary investment strategies. AEW Capital Management is a value-oriented investment manager that selects REITs it believes are mispriced relative to their peers. RREEF America selects real-estate securities after evaluating both external factors such as the business cycle and competitive environment as well as company-specific factors such as leverage, earnings growth and competitive position.
PowerShares DB Commodity Index Tracking Fund
The PowerShares DB Commodity Index Tracking Fund is expected to offer investors a cost-effective and convenient way to obtain exposure to commodity futures. It also earns interest income from US Treasury bills and other high-quality short-term fixed income securities.
Real-Return Bonds
Real-Return Bonds (RRBs), which are also known as inflation-linked bonds or ILBs, provide investors in the portfolio with a fixed-income component that is indexed to inflation. Both the principal and the interest payments of RRBs adjust to changes in the Consumer Price Index.
