September, 2023
The Fund’s equity portfolio underperformed over the period. In terms of global equities, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged delivered negative absolute and excess returns for the quarter. Both funds were impacted by poor stock selection in the US, including underweights to chipmaker NVIDIA Corp. and oil major Exxon Mobil. Stock selection in emerging markets also weighed on performance. Within our domestic equity portfolio, the Russell Investments Australian Opportunities Fund significantly underperformed its benchmark, driven in part by a material overweight to the poor-performing healthcare space. Stock selection within the sector also weighed on returns, including overweights to ResMed and New Zealand’s Fisher & Paykel Healthcare. In contrast, Vinva’s Australian Equitised Long-Short Fund was flat for the quarter. We maintain a diversified equity exposure across both global and Australian markets. Non-US developed equities are relatively cheaper than US equities and likely to benefit from weakness in the US dollar (USD) should the Fed become less hawkish. However, until the Fed does become less hawkish, we maintain a neutral preference for non-US developed equities.
Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund (RABF) performed in line with its benchmark; though it did record negative absolute returns for the quarter. RABF benefited from a strategic overweight to credit, however this was offset by a slightly long duration exposure; positioning which was impacted by the sharp rise in government bond yields we saw over the period. The Russell Investments International Bond Fund – $A Hedged delivered negative absolute and excess returns in the third quarter. In terms of our extended fixed income exposure, Metrics Credit outperformed traditional bonds, with Australian loans continuing to generate income-like returns. The Russell Investments Australian Floating Rate Fund also performed well as floating rate assets continued to benefit from a higher interest rate environment. We believe US, UK and German government bonds offer reasonable value. In the US, the spread between two- and 10-year government bond yields is close to an extreme. The yield curve has steepened in recent months, which we had anticipated given that this tends to happen when the Fed finishes raising interest rates and markets start looking toward rate cuts. Japanese government bonds still look expensive despite the Bank of Japan’s recent announcement regarding their yield curve control policy.
Elsewhere in the Fund, our exposures to global and Australian listed property weighed on performance, while a weaker Australian dollar (relative to the USD) boosted the returns of the Fund’s assets denominated in foreign currency. Markets have faced multiple concerns in the past 12 to 24 months; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, a slowing Chinese economy and regional banking crises in the US and Europe. Despite these events and more, the US economy has so far proven remarkably resilient, with markets continuing to price in a ‘soft landing’; though we are seeing several leading economic indicators flash warning signs. Moving forward, the main uncertainty for markets is the outlook for the US economy. Whilst economic data so far this year has proven more resilient than markets initially expected, our base case remains that a recession in the US is more likely than not. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish later this year and into 2024.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-4-1.pdfAugust, 2023
Global share markets fell (in local currency terms) in August. Contributing to the decline was speculation that US interest rates will remain higher for longer amid still high inflation and a robust jobs market. Whilst market pricing implies the US Federal Reserve (Fed) will leave interest rates on hold when it next meets in September, recent Fed rhetoric suggests the Bank believes its fight against inflation is far from over.
The minutes from the Fed’s July gathering, when the Bank raised rates a further 0.25%, revealed that officials still see significant upside risks to inflation which may require further tightening of monetary policy. Moreover, chairman Jerome Powell, speaking at the annual Jackson Hole Symposium, said the Bank is prepared to raise interest rates further if necessary and will keep them high until its convinced that inflation is on a sustainable path back toward its 2.0% target. Stocks were also impacted by concerns over the deteriorating economic outlook in China, where the early optimism surrounding the country’s post-pandemic recovery has faded amid a slump in the country’s property market and a string of increasingly disappointing economic data.
Australian shares also fell over the period, driven in part by concerns over China’s growth prospects, weakness across the major miners and a poor lead from major developed markets. Limiting the local market’s decline was the Reserve Bank of Australia’s decision to leave interest rates on hold at 4.10% early in the period and a series of mostly encouraging earnings updates. Global bonds were slightly weaker for the month. Credit markets also underperformed, with spreads widening throughout the period. Australian bonds outperformed their global peers in August, while domestic credit spreads continued to tighten.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-5.pdfJune, 2023
Global share markets performed well in the June quarter. Contributing to the gains were increasing expectations the US Federal Reserve (Fed) would soon hit the pause button on interest rates, which it did; the Bank maintaining its benchmark fed funds rate at a target range of between 5.00% and 5.25% in June. In its press release accompanying the decision, the Fed said, “holding the target range steady…allows the Committee to assess additional information and its implications for monetary policy.” However, a majority of officials still believe that high inflation, together with the enduring strength of the US economy, will likely warrant further rate increases this year. Stocks also benefited from fresh economic stimulus in China, an end to the standoff between Democrats and Republicans over the US government’s debt ceiling and a series of mostly encouraging earnings updates; which is to say earnings were ‘less bad’ than the market had anticipated. Australian shares made more modest gains relative to their global counterparts; the local market benefiting from easing inflation toward the end of the period and increasing speculation the Reserve Bank of Australia (RBA) would leave rates on hold in July. [Note: the RBA did in fact leave interest rates on hold following its early July gathering.]
Global bonds were slightly weaker over the period, with longer-term yields rising (prices falling) throughout the quarter. In contrast, credit markets were stronger. Australian bonds underperformed their global peers, while domestic credit markets were positive.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-2-1.pdfMarch, 2023
The Fund’s equity portfolio was mixed over the period. In terms of domestic equities, the Russell Investments Australian Opportunities Fund significantly outperformed its benchmark, benefiting from strong stock selection within the financials space. This included underweights to National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corp. and ANZ Group; collectively known as the ‘Big Four’. In contrast, Vinva’s Australian Equitised Long-Short Fund underperformed its benchmark, driven largely by the strategy’s segmentation signals. Partly offsetting this were good gains from the strategy’s quality and tactical signals. Within our global equities portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged underperformed their respective benchmarks over the period; though they did generate strong absolute returns for the quarter. Both funds were impacted by poor stock selection in the US, including underweights to large growth names like Apple, NVIDIA Corp. and electric car maker Tesla. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish.
Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund delivered positive absolute and excess returns for the quarter, benefiting from its duration positioning and an overweight to credit. The Russell Investments International Bond Fund – $A Hedged recorded positive absolute returns over the period but narrowly underperformed its benchmark. This underperformance was driven largely by interest rates positioning. In terms of our extended fixed income exposure, Metrics Credit performed well over the period, with Australian loans continuing to generate income-like returns. The Russell Investments Australian Floating Rate Fund and our exposure to global high-yield debt also added value. We believe government bond valuations have improved, with US Treasuries now offering good value.
UK bonds have also moved into bands which we believe offer good value, as have German bunds. Japanese bond valuations have begun to improve with recent changes to the Bank of Japan’s yield curve control policy, though the Bank’s key shortterm interest rate remains low at -0.10%. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff.
The Fund also benefited from its exposure to global and Australian listed property and global listed infrastructure; all of which benefited from the sharp decline in longer-term government bond yields we saw over the period. Meanwhile, a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency.
Markets have faced multiple concerns over the past 12 months or so; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, the impact of COVID-19 on China’s economy and, most recently, uncertainty surrounding the global banking system following the collapse of several US midsize banks and the forced sale of Credit Suisse. Moving forward, the main uncertainty is likely to remain the outlook for the US economy. We believe the pace and magnitude of Fed tightening creates the risk of a recession by the second half of this year. While a deep recession could trigger a larger equity bear market, we feel a slowdown or mild recession are the two most likely outcomes. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish in the second half of the year.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-4.pdfDecember, 2022
Within our global equity portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged posted strong absolute and excess returns for the quarter; the two funds benefiting from very strong stock selection in the US. This included underweights to large growth names like Apple, electric car maker Tesla and e-commerce giant Amazon.com. In contrast, our domestic equity portfolio weighed on overall performance.
The Russell Investments Australian Opportunities Fund (RAOF) recorded strong absolute returns over the period, though it did underperform its benchmark. Contributing to RAOF’s underperformance was poor stock selection within the materials space, including underweights to iron ore majors BHP Group, Fortescue Metals Group and Rio Tinto; all of which posted doubledigit gains for the quarter. Vinva’s Australian Equitised Long-Short Fund also underperformed its benchmark, albeit modestly, as weakness across the strategy’s segmentation and tactical signals overshadowed gains from its valuation and quality signals. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities as we believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar (USD) should the Fed become less hawkish.
The Fund’s traditional fixed income portfolio outperformed over the period, with the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund delivering positive absolute and excess returns for the quarter. Both funds benefited from their credit exposure. Within our extended fixed income portfolio, both Metrics Credit (Australian bank loans) and the Russell Investments Floating Rate Fund performed well over the period due to their lower sensitivity to interest rate movements. High-yield debt also outperformed, while the Russell Investments Emerging Market Debt Local Currency Fund posted strong absolute and excess returns on the back of general USD weakness and smaller rate hikes across major developed markets. We believe government bond valuations have improved, with US Treasuries now offering good value. UK bonds have also moved into bands which we believe offer good value, as have German bunds. However, there are concerns over the current economic situation in the UK and the volatility in bond markets caused by recent fiscal policy announcements and the BoE’s response.
We view Japanese bonds as moderately expensive. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff. More broadly, the Fund’s exposures to global and domestic listed property added value over the period, while a stronger Australian dollar weighed on the returns of the Fund’s assets denominated in foreign currency. In terms of overall positioning, we increased bond duration early in the quarter and added equity options protection in December in response to the strong rebound in equity markets. Both changes are likely to reduce volatility if recession risks continue to rise.
Moving forward, recession fears and central bank tightening continue to drive market volatility. Share markets have bounced considerably since their recent lows amid expectations that inflation may have peaked. This is consistent with our view that markets would stabilise and possibly even recover through the second half of 2022. However, we acknowledge that heightened short-term market volatility is likely to remain given responses across markets to ongoing inflation prints and central bank rate hike decisions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-3.pdfSeptember, 2022
Within our global equity portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged posted negative absolute returns for the quarter; though the two funds did outperform their benchmarks. Both funds benefited from strong stock selection within emerging markets and Asia Pacific ex Japan.
Our domestic equity portfolio was mixed for the quarter. Like its global counterpart, the Russell Investments Australian Opportunities Fund recorded negative absolute returns but outperformed its benchmark. Vinva’s Australian Equitised Long-Short Fund underperformed its benchmark due to weakness across the strategy’s valuation and technical signals, while the Russell Investments Australian Factor Exposure Fund posted modest absolute and excess returns over the period. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish. The Fund’s traditional fixed income portfolio was negatively impacted by the rise in government bond yields we saw over the period. Both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund posted negative absolute returns for the quarter; though the latter did outperform its benchmark. Within our extended fixed income portfolio, both Metrics Credit (Australian bank loans) and the Russell Investments Floating Rate Fund recorded strong absolute returns due to their lower sensitivity to interest rate movements.
The Russell Investments Emerging Market Debt Local Currency Fund also recorded positive absolute returns (in Australian dollar terms), though it narrowly underperformed its benchmark. We believe government bond valuations have improved, with US Treasuries now offering good value. UK bonds have also moved into bands which we believe offer good value; though there are concerns over the current economic situation in the UK and the volatility in bond markets caused by recent fiscal policy announcements and the BoE’s response.
We view German and Japanese bonds as moderately expensive. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks, which should limit the extent of any further selloff. More broadly, the Fund’s exposures to global and domestic listed property weighed on overall performance. Property stocks were impacted by rising interest rates, recession fears and a further spike in long-term government bond yields. Meanwhile, a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency. [Note: We removed Putnam’s Fixed Income Opportunities Strategy (rates volatility strategy) toward the end of the quarter.
The strategy provided strong absolute returns during 2022, as well as diversification benefits at the portfolio level. Given where markets are at now, together with the attractiveness of yields across traditional fixed income markets, we believe there are more predictable returns in these traditional asset classes.] Moving forward, recession fears and central bank tightening will continue to drive market volatility. We believe equity markets are oversold and that US core inflation has likely peaked.
In our view, this should help markets stabilise and possibly recover through the second half of 2022; though we acknowledge that heightened short-term market volatility is likely to persist given responses across markets to ongoing inflation prints and central bank rate hike decisions.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-2.pdfAugust, 2022
The Fund’s equity portfolio was mixed in August. Within our global equity portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged delivered negative absolute returns for the month. However, the two funds did outperform their benchmarks. This was due in part to the funds’ value bias as value names outperformed growth stocks. An overweight exposure to emerging markets, which outperformed their developed counterparts in August, also added value. In terms of Australian equities, both the Russell Investments Australian Opportunities Fund and Vinva’s Australian Equitised Long-Short Fund recorded positive absolute and excess returns in August; the latter benefiting from its behavioural, quality and segmentation signals.
We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities as non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish. Within the Fund’s traditional fixed income portfolio, both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund delivered negative absolute returns in August; though the two funds did outperform their respective benchmarks over the period.
Within our extended fixed income portfolio, the Russell Investments Floating Rate Fund, the Russell Investments Emerging Market Debt Local Currency Fund and the Metrics Credit Diversified Australian Senior Loan Fund all performed well in August, while the Russell Investments Global High Yield Fund gave back the previous month’s gains. We believe government bond valuations have improved, with US bonds now offering good value. However, we still view Japanese, German and UK bonds as moderately expensive.
In saying that, markets have fully priced in hawkish outlooks for most central banks, which should limit the extent of any further selloff in government bonds. Elsewhere in the Fund, our exposure to global and Australian listed property detracted from overall returns, while Amundi’s Absolute Volatility World Equities Fund – $A Hedged (long volatility strategy) added value as volatility across major equity markets rose in response to Powell’s hawkish rhetoric.
A weaker Australian dollar also boosted the returns of the Fund’s assets denominated in foreign currency. Moving forward, recession fears and central bank tightening will continue to drive market volatility. We believe equity markets are oversold and that US core inflation has likely peaked. In our view, this should help markets stabilise and possibly recover through the second half of 2022.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD-1.pdfJuly, 2022
Within our global equity portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged delivered positive absolute returns for the month. However, the two funds did underperform their benchmarks. This was due in part to the funds’ value bias as growth stocks outperformed. Poor stock selection in Japan also weighed on returns. In terms of Australian equities, the Russell Investments Australian Opportunities Fund and the Russell Investments Australian Factor Exposure Fund recorded strong absolute returns in July; though, like their global counterparts, both funds underperformed their benchmarks. Vinva’s Australian Equitised Long-Short Fund also recorded negative excess returns for the month. This was driven largely by weakness across the strategy’s valuation and behavioural signals. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities as non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish. The Fund’s traditional fixed income portfolio added value over the period, with both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund recording positive absolute and excess returns in July. Within our extended fixed income portfolio, the Russell Investments Floating Rate Fund performed well as prices on loans and securitised assets rebounded in line with a pickup in credit market activity. Our global high-yield debt exposure and the Metrics Credit Diversified Australian Senior Loan Fund also contributed positively to performance over the period. Partly offsetting this was our exposure to the Russell Investments Emerging Market Debt Local Currency Fund, which underperformed in unhedged Australian dollar (AUD) terms. We believe government bond valuations have improved, with US bonds now offering good value. However, we still view Japanese, German and UK bonds as moderately expensive. In saying that, markets have fully priced in hawkish outlooks for most central banks, which should limit the extent of any further selloff in government bonds. Our exposure to Australian listed property added further value over the period. Australian listed property benefited in part from a decline in longer-term government bond yields. In contrast, Amundi’s Absolute Volatility World Equities Fund – $A Hedged (long volatility strategy) detracted from performance in July as volatility across major equity markets eased amid speculation the Fed could potentially cut interest rates in 2023. Meanwhile, a stronger AUD impacted the returns of the Fund’s assets denominated in foreign currency. Moving forward, recession fears and central bank tightening will continue to drive market volatility. We believe equity markets are oversold and that US core inflation has likely peaked. In our view, this should help markets stabilise and possibly recover through the second half of 2022.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund-Class_A-English-RetMA-AUD.pdfSeptember, 2021
The Fund’s domestic equity portfolio contributed positively to performance, with the Russell Investments Australian Opportunities Fund (RAOF) delivering positive absolute and benchmark-relative returns for the quarter. RAOF benefited from strong stock selection within the more cyclical parts of the market; notably underweights to mining heavyweights Fortescue Metals Group and BHP Billiton. Both stocks fell on the back of a 46% decline in iron ore prices. The Russell Investments Australian Factor Exposure Fund (RAFEF) also recorded positive absolute returns for the quarter, though it did underperform its benchmark. Much of RAFEF’s underperformance was driven by its exposure to value and high-momentum stocks. Vinva’s Australian Equitised Long-Short Fund also underperformed its benchmark over the period. Within our global equity portfolio, the Russell Investments Global Opportunities Fund (RGOF) delivered positive absolute returns for the quarter but underperformed its benchmark. RGOF’s underperformance was driven in part by poor stock selection in the US and an overweight to emerging markets, which significantly underperformed their developed counterparts over the period. Moving forward, we maintain a diversified equity exposure across both global and Australian markets. The strong business cycle means we prefer the value equity factor over the growth factor and non-US equities over US equities. We also believe emerging market valuations are relatively more attractive
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund_Retail-2.pdfJune, 2021
The Fund’s global and domestic equity portfolios drove performance. In terms of global equities, the Russell Investments Global Opportunities Fund delivered very strong absolute returns for the quarter; though it narrowly underperformed its benchmark over the period. It was a similar theme within our Aus-tralian equity portfolio, with both the Russell Investments Australian Opportunities Fund and the Russell Investments Australian Factor Exposure Fund recording strong absolute returns but underperforming their respective benchmarks. Contributing to the two Australian funds’ underperformance was their value exposure, as investors tended to favour quality and growth names over more cyclical, cheaper value stocks. This was a partial reversal of the trend we saw through much of the previous two quarters and was driven largely by macroeconomic news flow, including uncertainty over the direction of interest rates.
Vinva’s Australian Equitised Long-Short Fund also underperformed its benchmark over the period. Mov-ing forward, we maintain a diversified equity exposure across both global and Australian markets. The strong business cycle means we prefer the value equity factor over the growth factor and non-US equi-ties over US equities. We also believe emerging market valuations are relatively more attractive. The Fund’s credit exposure was also positive for the quarter. Credit markets continued to perform well over the period, with spreads narrowing amid ongoing government and central bank stimulus and en-couraging earnings growth. In particular, the Fund benefited from its exposures to global floating rate credit and global high-yield debt. Our exposure to the Russell Investments Emerging Market Debt Local Currency Fund also added value. We continue to view both high-yield and investment-grade debt as slightly expensive; though they are attractive given the post-vaccine cycle outlook. 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 benchmark-relative returns for the quarter, benefiting largely from their respective credit exposures. We still view government bonds as expensive, even after the recent selloff. Central bank policy should limit rises in government bond yields during the recovery.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund_Retail-3.pdfApril, 2021
The Fund’s global and Australian equity portfolios contributed positively to performance over the period. In terms of global equities, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund (AUD Hedged) delivered strong absolute returns for the month; the two funds benefiting in part from positive stock selection in China and Canada. Within our Australian equity portfolio, the Russell Investments Australian Factor Exposure Fund and the Russell Investments Australian Opportunities Fund (RAOF) recorded positive absolute returns in April; though the latter underperformed its benchmark over the period. RAOF’s underperformance was driven by its pro-cyclical bias as investors tended to favour growth-oriented names over more cyclical, cheaper value stocks.
The Vinva Australian Equitised Long/Short Fund also underperformed its benchmark in April due to weakness in the strategy’s valuation signals. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US stocks over US stocks as the post-vaccine economic recovery should favour undervalued cyclical value names over expensive technology and growth stocks. We believe value in emerging markets has become less compelling due to the higher risk-free rate, i.e. US Treasury yields. Nonetheless, we believe the equity cycle overall is supported by a stronger economy, improved earnings and monetary policy. The Fund’s credit exposure also added value over the period. In particular, the Fund benefited from its exposures to global high-yield debt and global floating rate credit; both of which outperformed amid improving investor sentiment and tighter credit spreads.
Metrics Credit was also positive for the month, though it generated more modest returns. We maintain our view that high-yield and investment-grade debt are slightly expensive. However, we believe both remain attractive given the post-vaccine cycle outlook. The Fund’s exposures to the Russell Investments Australian Bond Fund and the Russell Investments International Bond Fund (AUD Hedged) added further value in April. Both funds recorded positive absolute and benchmark-relative returns on the back of their credit exposure. We continue to see government bonds as universally expensive, even after the recent selloff. Moreover, we expect central bank policy will limit rises in government bond yields during the recovery phase. In contrast, our investment in Amundi’s Absolute Volatility World Equities Fund (AUD Hedged) detracted from overall performance in April as equity market volatility continued to ease amid improving risk sentiment. A stronger Australian dollar (AUD) also impacted the returns of our unhedged international exposures. The AUD benefited from a series of encouraging domestic economic data and rising commodity prices.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund_Retail-1.pdfDecember, 2020
The Fund’s global and domestic equity portfolios drove performance. In terms of global equities, the Russell Investments Global Opportunities Fund delivered positive excess returns for the quarter, driven by strong performances from its emerging markets and UK equity specialists. A bias toward value also contributed to returns as positive vaccine developments saw investors rotate out of expensive growth names in favour of value stocks. Globally, we maintain a preference for non-US stocks, including emerging markets. We believe the post-vaccine economic recovery should favour undervalued cyclical value names over expensive technology and growth stocks, which would imply a rotation away from US stocks. Within our Australian equity portfolio, both the Russell Investments Australian Opportunities Fund and the Russell Investments Australian Factor Exposure Fund (RAFEF) recorded strong absolute and benchmark-relative returns for the quarter.
The Opportunities Fund benefited from its pro-cyclical bias and a tilt toward value stocks. Similarly, RAFEF’s performance was driven by its value bias as well as underweights to more defensive and growth names. Partly offsetting this was the Vinva Australian Equitised Long-Short Fund, which underperformed its benchmark over the period. Moving forward, we maintain a diversified equity exposure across both global and Australian markets as we believe the medium-term outlook for economies and corporate earnings is positive. The Fund’s credit exposure was also positive for the quarter. Credit markets performed well over the period, with spreads narrowing as investors remained optimistic about the global recovery. In particular, the Fund benefited from its exposures to global high-yield debt and floating rate credit, which recorded good gains as bank loans and securitised assets continued to recover. We view both high-yield and investment-grade debt as slightly expensive; though they are attractive given the post-vaccine cycle outlook. Within our fixed income portfolio, credit positioning contributed to positive excess returns for both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund.
We still view government bonds as universally expensive, with low inflation and dovish central banks likely to limit rises in bond yields during the recovery phase. The performance of the Fund’s hedges was mixed over the period. Amundi’s Absolute Volatility World Equities Fund – $A Hedged underperformed as volatility eased throughout the quarter, while a stronger Australian dollar impacted the returns of the Fund’s assets denominated in foreign currency. In contrast, our overweight to the Japanese yen (JPY) added value after it strengthened against the US dollar. We maintain our overweight to the JPY as a defensive play.
Vaccine prospects are likely to make 2021 a year of global economic recovery. While markets have priced in a fair amount of the good news, more gains seem possible as corporate profits rebound and central banks maintain accommodative monetary policies. With the world in the early post-recession recovery phase of the business cycle, our medium-term outlook for economies and corporate earnings is positive. We believe 2021 will feature an extended period of low-inflation, low-interest rate growth that favours equities over bonds.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Russell_Investments_Multi-Asset_Growth_Strategy_Fund_Retail.pdfasset_class:
asset_category:
peer_benchmark:
broad_market_index:
manager_contact_details: Array
ticker: RIM0086AU
release_schedule: Monthly
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Fund Resources
Fund Fact Sheet
fund_features:
The Fund is diversified across a range of asset classes, including equities, fixed income and alternatives, with a dynamic approach to asset allocation. The Fund aims to provide a return (after fees and costs) of 4.0% pa above inflation over the medium to long term, with a focus on risk management.
structure: Managed Fund