Russell Investments may be best know for its namesake stock indices, but the 73-year-old company's core business is helping pension funds, foundations, and others with large pots of money to invest.
Russell Investments may be best known for its namesake stock indexes, but the 73-year-old company’s core business is helping pension funds, foundations and others with large pots of money to invest.
Russell does that through its proprietary methods of evaluating money managers’ performance over time. The company advises corporate pension funds and other institutions on who the best money managers are for the goals they’re trying to achieve.
Russell started its consulting business in 1969, when it landed J.C. Penney as a client. In the early-1980s, the firm entered the investment-management business itself; it now has $151 billion in assets under management.
But Russell doesn’t manage all that money directly. Each of its funds is really a mosaic of separate products from different companies, blended like a custom gallon of paint.
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Russell’s blended funds can reflect a specific type of asset (U.S. small-company stocks, global blue-chips, corporate bonds, real estate), investment philosophy (growth versus value, for example, or defensive versus aggressive) or even time frame (so-called “target-date” funds, which are especially popular in 401(k) retirement plans and among parents saving for college).
Out of thousands of available funds and managers, Russell says, only 210 products make the firm’s cut to gain roles in its funds.
Besides big corporate pension plans, Russell’s clients include 401(k) plans, nonprofits, union pension plans and individual investors.
Russell’s indexes — the best-known of which are the Russell 1000 index of larger U.S. companies and the small-company Russell 2000 index — are widely used to gauge the performance of mutual funds and the people who run them.
Russell also makes money by licensing its indexes to other firms, which use them to create exchange-traded funds (ETFs) — securities that track a particular index or basket of assets but trade like shares of stock on an exchange.
In July, a Russell unit asked the U.S. Securities and Exchange Commission for permission to offer its own lineup of ETFs, though without specifying what those ETFs might look like. If Russell decided to offer ETFs based on its own indexes, that could set up a conflict with companies like iShares that already sell such securities.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org