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Russell Investments Expands SMA Options

The investment manager has added eight new fixed-income and multi-asset SMAs for advisors to use in client portfolios.

Russell Investments, a Seattle-based investment manager and OCIO, has launched eight new fixed-income and multi-asset separately managed accounts.

The firm’s roster of products now includes four portfolios of fixed-income securities packaged as municipal and Treasury ladders. (Laddered 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 simplistic formats. With these, we are allowing them to buy fully-allocated portfolios in single accounts,” said Kevin Knowles, senior director of personalized solutions for Russell.

Russell’s new products also include four multi-asset options of equity and fixed-income securities either packaged in direct indexing or a mix of active and direct indexing allocations.

“The purpose of those products is to provide advisors with a one-stop shop with a UMA-like experience in an SMA that provides a fully allocated, global equity portfolio,” Knowles said.

Knowles added that the addition of the new products was driven by demand from advisors.

“It’s a natural evolution to go from core equity to give an UMA-like experience,” he said. “We’ve seen the demand by where inflows are going and by talking to advisors. There’s interest in ladder portfolios. They are popular for high-net-worth investors and even coming down market to 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 toward SMAs.

“There is still room for niche players that offer products with unique or differentiated skills, but the bulk of advisors have made a rather determined shift toward offering asset allocation models,” Bathon said. “Generally speaking, SMAs have a decided advantage—compared with funds—in pricing, tax efficiency and customization.”

Bathon added that technology supporting SMAs has improved in the last 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 byproduct of that expertise is model portfolios and executing via the SMA structure puts Russell at the leading edge of 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, the Fidelity Separate Account Network and SMArtX Advisory Solutions. They are also partially available on Envestnet SMA.

The new products include:

  • Personalized Municipal Ladder 1-5 Year SMA
  • Personalized Municipal Ladder 1-10 Year SMA
  • Personalized Treasury Ladder 1-5 Year SMA
  • Personalized Treasury Ladder 1-10 Year SMA
  • Personalized 60/40 DI (direct indexing) Core Allocation SMA
  • Personalized 70/30 DI Core Allocation SMA
  • Personalized 60/40 Core Allocation SMA
  • Personalized 70/30 Core Allocation SMA

The fixed-income products are managed by Brian Pringle, director, customized portfolio solutions - fixed income. Each of the four options has an investment minimum of $250,000. The two newly available multi-asset DI core solutions are managed by Nick Zylkowski, managing director, co-head of customized 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 an investment minimum of $750,000 or $850,000.

In addition, the new products join an existing roster 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 personalized direct-indexed SMA strategies (Direct Indexed Large Cap, Direct Indexed Large Cap Growth, Direct Indexed Large Cap Value, Direct Indexed All Cap and Direct Indexed International).

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