Russell Introduces New High Efficiency Factor Index (HEFI) Series

SEATTLE--()--Russell Investments today announces the new Russell High Efficiency™ Factor Index (HEFI) Series, a set of comprehensive index tools designed to help institutional investors effectively manage factor exposures in investment portfolios. This new series of “smart beta” indexes, jointly created by Russell’s index and investment divisions, uses a consistent, transparent, factor-based weighting methodology to provide exposure to four commonly identified and utilized investment factors: low volatility, momentum, quality and value.

“We began with the end user when conceptualizing our new indexes and tapped into Russell’s investment and index expertise to create them,” said Rolf Agather, managing director of global research and innovation at Russell Investments. “Investors want more precise tools to access investment factors for desired outcomes. The HEFI methodology puts factor exposure at the heart of index construction.”

In Russell’s recently published 2014 smart beta market survey, which polled 181 asset owners across Europe and North America on their perceptions and adoption of smart beta indexes, respondents’ single greatest “unmet need” was for smart beta indexes that helped control unwanted or introduce desired factor exposures.

The Russell HEFI series was created to help institutional investors meet these objectives. It uses a factor based weighting methodology to produce indexes providing strong factor capture with minimal active risk, low relative turnover and high investability. HEFI is initially available on six Russell large cap equity universes; Global, Developed, Developed x-US, US, Developed Europe, and Emerging Markets. The consistent methodology utilized across the Russell HEFI series provides an advantage to investors looking to combine factor exposures in a portfolio.

Russell Investments believes that investment factors such as low volatility, momentum, quality and value are significant drivers of equity returns and that these factors have persisted across markets and through time. Factor indexes are increasingly being used as tools by investors wishing to express a strategic or tactical view on one or more of these factors.

According to Scott Bennett, director of equity strategy and research at Russell, “The Russell HEFI Series focuses on equity market factors which are relevant, comprehensive, universally robust, persistent and implementable. In determining factor specifications for the new indexes we relied on our extensive capital market insights and drew on our experience researching active managers, constructing multi-factor portfolios and designing market leading indexes. And we ensured that all our factor specifications were consistent with academic research and were empirically relevant, using industry standard risk models.”

Russell has been a leader in factor-based indexes for nearly three decades, starting with the introduction of the Russell Value and Growth Indexes in 1987 and, more recently, the Russell Defensive and Dynamic Indexes as a further evolution of style-based benchmarks. In addition to its comprehensive global family of market capitalization-weighted equity indexes, Russell offers a full suite of alternative, or “smart beta” indexes to help investors pursue a wide range of outcomes. New strategy or thematic indexes launched by Russell in recent years include equal weighted, fundamentally weighted, high dividend yield, geographic exposure, high efficiency defensive, volatility control and conscious currency.

For more information on the Russell High Efficiency Factor Indexes and on Russell’s suite of smart beta indexes, go to the Russell Indexes website.

About Russell Investments

Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell stands with institutional investors, financial advisors and individuals working with their advisors—using the firm’s core capabilities that extend across capital market insights, manager research, portfolio construction, portfolio implementation and indexes to help each achieve their desired investment outcomes.

Russell has more than $259 billion in assets under management (as of 3/31/2014) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 6/30/2013). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.6 trillion in 2013 through its implementation services business. Russell also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities. Approximately $5.2 trillion in assets are benchmarked (as of 12/31/2013) to the Russell Indexes, which have provided investors with 30 years of smarter beta.

Headquartered in Seattle, Washington, Russell operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, San Diego, Milwaukee and Edinburgh. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.

Russell Investments is a Washington, USA Corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.

Russell Investments is the owner of the trademarks, service marks and copyrights related to the Russell Indexes.

Indexes are unmanaged and cannot be invested in directly.

This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty.

Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

Copyright 2014

CORP-9468

Contacts

Russell Investments
Max Leitenberger, 914-434-5725
maxl@riverinc.com
or
Tim Benedict, 212-702-7823
TBenedict@russell.com

Release Summary

Russell Investments announces the Russell High Efficiency Factor Index (HEFI) Series, a new series of “smart beta” indexes.

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Contacts

Russell Investments
Max Leitenberger, 914-434-5725
maxl@riverinc.com
or
Tim Benedict, 212-702-7823
TBenedict@russell.com