February, 2023
The Portfolio typically invests in a diversified investment mix with exposure to growth investments of around 90% and defensive investments of around 10% over the long term, however the allocations will be actively managed within the allowable ranges depending on market conditions.
Global share markets fell (in local currency terms) over the period, driven by expectations US interest rates will need to rise by more than previously thought following a surprisingly strong jobs report and disappointing inflation numbers. The US economy added over half a million jobs in January, while the latest headline inflation figures revealed only a modest easing in prices.
Compounding this was a jump in the Personal Consumption Expenditures Price Index – the Federal Reserve (Fed)’s preferred measure of inflation – which climbed 5.4% in the 12 months to 31 January. The Fed had raised interest rates by a smaller 0.25% margin early in the period amid increasing evidence inflation had peaked. However, the recent jobs and inflation figures suggested US interest rates would need to go higher (and likely remain there for longer). In fact, at month end the market was forecasting US interest rates to peak at 5.50% this year compared to market pricing of a 4.90% peak at the beginning of the period. Stocks were also impacted by a series of mixed corporate earnings and heightened Sino-US tensions. Australian shares also underperformed after the Reserve Bank of Australia raised interest rates for a ninth consecutive month and warned that more rate hikes will be needed to tame inflation.
Government bonds weakened in February, with longer-term yields rising (prices falling) over the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-8.pdfJanuary, 2023
The portfolio returned 4.33%^ in January. Overweights to listed growth assets, i.e. Australian and global equities, contributed positively to performance. An overweight to extended fixed income assets also added value.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-7.pdfDecember, 2022
During the quarter, there were changes to positioning within the dynamic core of the managed portfolio. Early in the period, bond duration was increased, while equity options protection was added in December after a strong rebound. Both of these changes are likely to reduce volatility if recession risks continue to rise. We also modestly increased our weighting to Metrics Credit during the quarter. Overall, the managed portfolio is aligned with its long-term asset allocation as we wait patiently for opportunities.
The direct Australian equity portfolio underperformed the benchmark. A modest underweight to the strong-performing utilities space detracted from returns. Stock selection within the materials and energy sectors also weighed on performance, including overweights to Ampol and James Hardie. Partly offsetting these positions was a nil exposure to Pilbara Minerals, which fell sharply over the period. Stock selection within the financials space also added value; notably an overweight to Suncorp Group. In terms of global equity managers, UK equity specialist J O Hambro significantly outperformed its benchmark, benefiting in part from stock selection within the communication services and utilities sectors. Emerging markets specialist Oaktree Capital and core global equities manager Fiera Capital also outperformed. Looking ahead, we expect higher levels of volatility to continue, with active management to play an important role in navigating through it. We expect to increase growth asset exposure on major market reversals and decrease growth asset exposure on market rallies. This is a very important time to remain flexible as there are competing forces related to inflation and growth. We retain the same themes as recent months, i.e. a preference for emerging markets over developed markets and overweights to both global small caps and floating rate credit.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-6.pdfNovember, 2022
The Portfolio typically invests in a diversified investment mix with exposure to growth investments of around 90% and defensive investments of around 10% over the long term, however the allocations will be actively managed within the allowable ranges depending on market conditions.
Global share markets made good gains in November, driven in part by hopes the US Federal Reserve (Fed) may soon pivot to smaller rate hikes amid speculation US inflation has peaked. The Fed raised interest rates by a further 0.75% early in the period after headline inflation jumped 8.2% in the 12 months to 30 September. However, subsequent data showed that headline inflation slowed to 7.7% in the 12 months to 31 October, which was the measure’s lowest reading since January and less than the 7.9% rise the market had anticipated. Compounding this were the minutes from the Fed’s November meeting, which revealed a substantial majority of participants judged that a slowing in the pace of rate increases would likely soon be appropriate. Stocks also benefited from preliminary data that showed consumer prices in the euro-zone slowed in the 12 months to 30 November, Beijing’s decision to begin walking back some of its COVID-19 prevention measures and easing Sino-US tensions. Australian shares also performed well, benefiting from the Reserve Bank of Australia (RBA)’s decision to continue raising rates by just 0.25%, easing inflation and strong gains across the major miners.
Global bonds outperformed in November amid softer US and European inflation figures and the asset class’s traditionally defensive qualities in the face of heightened geopolitical risks.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-5.pdfOctober, 2022
The portfolio returned 5.35%^ in October. Overweights to listed growth assets, i.e. Australian and global equities, contributed positively to performance. An overweight to extended fixed income assets also added value.
Global share markets made strong gains in October even as the world’s major central banks continued to raise interest rates in the face of persistently high inflation. Investors were instead encouraged by speculation that officials may soon pivot toward a less aggressive monetary policy stance given the typical lag effects of higher interest rates and the potential impact that sharply higher rates will have on economic growth. Share markets also benefited from a series of positive US and European earnings updates, as well as speculation that stocks, which have sold off sharply so far this year, may have reached the bottom. Australian shares also performed well, driven largely by the Reserve Bank of Australia’s decision to cut interest rates by less than expected despite uncomfortably high inflation. Government bonds continued to underperform against a backdrop of rising interest rates.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-4.pdfSeptember, 2022
During the quarter, we removed the Vanguard Australian Shares Index ETF and increased our small caps exposure by adding the Vanguard MSCI Australian Small Companies Index ETF. We also diversified listed real assets away from Australian listed property by selling the Vanguard Australian Property ETF and buying both the Vanguard International Property Fund and the Vanguard Global Infrastructure Fund. Overall, the portfolio is aligned with its long-term asset allocation as we wait patiently for opportunities in this volatile environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-3.pdfAugust, 2022
The portfolio returned -0.41%^ in August. Overweights to equities and credit detracted from performance, including global high-yield debt, which gave back the previous month’s gains. In contrast, stock selection within equities added value over the period.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-2.pdfJuly, 2022
Toward the end of the month, we introduced several new strategies to further diversify the portfolio. Specifically, we added Australian small caps to complement our large cap direct stock exposure, and global property and infrastructure to diversify away from our Australian property exposure. We also added emerging market bonds to diversify the portfolio’s extended fixed income exposure. Overall, the portfolio is aligned with its long-term asset allocation as we wait patiently for opportunities in this volatile environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet-1.pdfJune, 2022
The portfolio was down 10.09%^ in the June quarter. An overweight to listed property and short-term credit (loans) weighed on overall performance. In contrast, positive stock selection within global equities and an underweight to government bonds added value.
We reduced our exposure to growth assets as the market sold off. We also rebalanced our Australian equities exposure toward the end of the period. We increased our exposures to energy, materials and financials, while reducing our exposures to information technology and consumer-related names. Overall, the portfolio remains more defensively positioned, which is in line with our expectations of more volatility ahead.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell-Investments-Managed-Portfolio-Growth-Factsheet.pdfApril, 2022
The Fund’s global and domestic equity portfolios contributed positively to performance over the period. In terms of global equities, both the Russell Investments Tax Effective Global Shares Fund (TEGS) and the Russell Investments Multi-Asset Factor Exposure Fund outperformed their respective benchmarks in April. TEGS in particular benefited from its value bias and strong stock selection in Continental Europe. Within our Australian equity portfolio, the Russell Investments Australian Shares Core Fund and the Russell Investments Australian Opportunities Fund recorded positive excess returns for the month.
Both funds benefited from their value bias and a sizable underweight to BHP Group. Partly offsetting this was our exposure to the Russell Investments Australian Factor Exposure Fund, which narrowly underperformed its benchmark in April. Our exposure to Australian listed property added further value over the period. Australian listed property outperformed the broader domestic equity market amid better-than-expected earnings within the sector. Within our traditional fixed income portfolio, the Russell Investments International Bond Fund – $A Hedged delivered negative absolute returns for the month, though it did slightly outperform its benchmark. The Russell Investments Australian Bond Fund recorded both negative absolute and benchmark-relative returns over the period. Credit returns were slightly negative in April, though global floating rate credit did outperform given its low sensitivity to interest rates. Our global listed property and global listed infrastructure exposures also weighed on performance in April.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Portfolio_Series_-_Growth_-_Class_A_AUD-2.pdfJune, 2021
Contributing positively to performance were strong absolute returns from our global equity portfolio, including the Russell Investments Tax Effective Global Shares Fund and the Russell Investments Multi-Asset Factor Exposure Fund.
However, both funds narrowly underperformed their benchmarks over the period. This was due largely to their value exposure, as investors tended to favour quality and growth names over more cyclical, cheaper value stocks. It was a similar theme within our Australian equity portfolio, with the Russell Investments Australian Shares Core Fund, the Russell Investments Australian Opportunities Fund and the Russell Investments Australian Factor Exposure Fund all recording strong absolute returns for the quarter but underperforming their benchmarks. The Fund’s credit exposure also added value over the period, including global floating rate credit and global high-yield debt. Our exposure to the Russell Investments Emerging Market Debt Local Currency Fund was also positive, as were our exposures to bank loans and securitised assets.
Within our fixed income portfolio, both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund recorded positive absolute and excess returns for the quarter. The two funds benefited largely from their overweight to credit. An overweight to global listed property, which outperformed the broader global equity market over the period, added further value.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Portfolio_Series_-_Growth_-_Class_A_AUD-3.pdfMay, 2021
The Fund’s global equity portfolio contributed positively to performance, with the Russell Investments Tax Effective Global Shares Fund and the Russell Investments Multi-Asset Factor Exposure Fund delivering strong absolute and benchmark-relative returns for the month. Both funds benefited from their value bias as value stocks outperformed their growth counterparts over the period. Within our Australian equity portfolio, the Russell Investments Australian Factor Exposure Fund recorded positive absolute and benchmarkrelative returns in May, driven largely by its value exposure. The Russell Investments
Australian Shares Core Fund and the Russell Investments Australian Opportunities Fund also posted positive absolute returns for the month, however both funds underperformed their benchmark. Much of this benchmark-relative underperformance was driven by a handful of stock-specific positions; notably a sizable underweight to CBA. The Fund’s fixed income portfolio also added value in May. Both the Russell Investments International Bond Fund (AUD Hedged) and the Russell Investments Australian Bond Fund delivered positive absolute and benchmark-relative returns for the month. The two funds continued to benefit from their respective credit exposures.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Portfolio_Series_-_Growth_-_Class_A_AUD-1-1.pdfApril, 2021
The Fund’s global and domestic fixed income portfolios contributed positively to performance, with the Russell Investments International Bond Fund (AUD Hedged) and the Russell Investments Australian Bond Fund recording positive absolute and benchmarkrelative returns for the month. Both funds benefited from their credit exposures.
Our overweight to extended fixed income assets also added value; notably our exposure to global floating rate credit, which outperformed amid improving investor sentiment and tighter credit spreads. Metrics Credit was also positive for the month. In contrast, our global and Australian equity portfolios were mixed in April. In terms of global equities, the Russell Investments Tax Effective Global Shares Fund (TEGS) recorded strong absolute returns over the period but underperformed its benchmark. TEGS was impacted in part by its pro-cyclical bias as investors tended to favour growth-oriented names over more cyclical, cheaper value stocks.
The Russell Investments Multi-Asset Factor Exposure Fund and the Russell Investments Global Opportunities Fund (AUD Hedged) performed in line with their respective benchmarks in April; though, like TEGS, they did deliver strong absolute returns. It was a similar theme within our Australian equity portfolio, with the Russell Investments Australian Shares Core Fund and the Russell Investments Australian
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Portfolio_Series_-_Growth_-_Class_A_AUD-1.pdfDecember, 2020
The Fund’s global and domestic equity portfolios contributed positively to performance over the period. In terms of global equities, both the Russell Investments Tax Effective Global Shares Fund and the Russell Investments Global Opportunities Fund delivered positive excess returns for the quarter, driven by strong performances from their emerging markets and UK equity specialists. The Russell Investments Multi-Asset Factor Exposure Fund also performed well, benefiting largely from its value exposure. Within our Australian equity portfolio, both the Russell Investments Australian Shares Core Fund and the Russell Investments Australian Factor Exposure Fund recorded strong absolute and benchmark relative returns over the period.
The Fund’s credit exposure was also positive for the quarter; notably global high-yield debt and floating rate credit, which recorded good gains as bank loans and securitised assets continued to recover. Credit positioning also contributed to positive excess returns for the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund. Also adding value over the period were our exposures to global and Australian listed property and an overweight to the Japanese yen. In contrast, a stronger Australian dollar impacted the returns of the Fund’s assets denominated in foreign currency
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Portfolio_Series_-_Growth_-_Class_A_AUD.pdfasset_class:
asset_category:
peer_benchmark:
broad_market_index:
manager_contact_details: Array
ticker: RIM0025AU
release_schedule: Monthly
commentary_block: Array
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fund_features:
Russell Investments Portfolio Series – Growth aims to provide capital growth over the long term consistent with a portfolio focusing on growth assets, while accepting fluctuations in capital values in the short term. The Fund typically invests in a diversified portfolio mix with exposure to growth investments of around 90% and defensive investments of around 10%. Derivatives may be used to implement investment strategies.
structure: Managed Fund