Now the firm is trying to establish itself as a manager of ETFs.
Russell last month launched 16 new ETFs — six “investment discipline” funds and ten “factor” ETFs.
The Russell investment discipline line of ETFs is hand-tailored by manager research and doesn’t weight stocks solely by market cap. The six new Russell ETFs will try to optimize the investment styles that professional investment managers use when selecting securities in the various asset classes, the firm says.
“The unique process an investment manager uses to select stocks is at the heart of what differentiates a fund from its benchmark and other funds,” said David Koenig, investment strategist at Russell. “This is the crux of asset management. Though this may seem obvious, gaining full understanding of a manager’s process can be challenging for investors because the manager’s methodology is often not completely transparent.”
In a study based on large-cap growth in actively managed mutual funds over five years, Koenig reveals that varying investment manager styles may yield a wide range of resulting performances.
“Looking for exposure to speciﬁc types of companies—for example, the largest, fastest-growing companies—would need to know more about a manager’s approach than just the fund’s style classiﬁcation to ensure that they were gaining the exposure they had targeted,” commented Koenig.
The new investment discipline ETFs include: