Russell Investments, a Seattle-based investment manager and OCIO, has launched eight new separately managed fixed income and multi-asset accounts.
The firm's product portfolio now includes four portfolios of fixed income securities packaged as municipal and treasury grades. (Layered strategies typically include a selection of bonds with different maturity dates to provide diversification.)
“Advisors are looking for simplicity and looking to deliver complex solutions to clients in simple formats. With these, we're allowing them to buy fully allocated portfolios in single accounts,” said Kevin Knowles, senior director of custom solutions for Russell.
Russell's new products also include four multi-asset options of equity and fixed income securities or packaged in direct indexing or a mix of active and direct indexing allocations.
“The goal of these products is to provide advisors with a one-stop shop with a UMA-like experience in an SMA that offers a fully-allocated global equity portfolio,” Knowles said.
Knowles added that the addition of new products was driven by demand from advisors.
“It's a natural evolution to move from core capital to deliver a UMA-like experience,” he said. “We have seen the request from where the entrances are going and talking with the councilors. There is interest in ladder portfolios. They are popular with high net worth investors and even down market to the mass affluent.”
Neil Bathon, founder and partner at FUSE Research Network, said the move is in line with broader investment trends away from individual strategies towards SMAs.
“There is still room for niche players that offer products with unique or differentiated capabilities, but the majority of advisors have made a fairly determined shift toward offering asset allocation models,” Bathon said. “Overall, SMAs have a decided advantage – compared to funds – in pricing, tax efficiency and customization.”
Bathon added that the technology supporting SMAs has improved over the past decade, resulting in lower minimums and greater ease of use. This makes the structure one of the few potential sources of organic growth for investment managers.
“Part of Russell's positioning is that of an expert in manager selection and sophisticated portfolio construction techniques,” Bathon said. “The natural by-product of this expertise is the model portfolios and execution through the SMA structure puts Russell at a leading edge over competitors in terms of being properly positioned for how the business is evolving.”
The new products are available on several custodial platforms, including Charles Schwab, Fidelity Separate Account Network and SMArtX Advisory Solutions. They are also partially available on Envestnet SMA.
New products include:
- Personalized Municipal Scale SMA 1-5 Years
- Custom Municipal Scale 1-10 Years SMA
- Custom Treasury Scale 1-5 Year SMA
- Custom Treasury Scale 1-10 Year SMA
- Custom 60/40 DI (direct indexing) SMA Core Allocation
- Custom 70/30 DI Core Allocation SMA
- 60/40 Custom SMA Allocation
- Custom 70/30 SMA Allocation
Fixed income products are managed by Brian Pringle, director, customized portfolio solutions – fixed income. Each of the four options has a minimum investment of $250,000. The two available core multi-asset DI solutions are managed by Nick Zylkowski, managing director, co-head of custom portfolio solutions, while the two new core allocation solutions are managed by Zylkowski and Jordan McCall, director, senior portfolio manager – equity. These four options have a minimum investment of $750,000 or $850,000.
In addition, the new products join an existing list from Russell that includes two core equity SMAs (Core Equity and Direct Indexed Core Equity), three active SMA strategies (Large Cap, Small/Mid Cap, and International) and five custom Directly Indexed SMA Strategies (Directly Indexed Large Cap, Directly Indexed Large Cap Growth, Directly Indexed Large Cap Value, Directly Indexed Total Equity and Directly Indexed International).