Russell Investments Expands Tax-Managed Fund Offerings and Enhances Strategic Asset Allocation in Tax-Managed Model Portfolios Designed to Help Investors Achieve Higher After-Tax Returns

New Russell Tax-Managed International Equity Fund and Russell Tax Exempt High Yield Bond Fund join Russell Tax-Managed Model Strategies, boosting each model’s allocation to tax-aware funds to greater than 90%

SEATTLE--()--In an effort to provide financial advisors with multi-asset investment solutions that seek to deliver higher after-tax returns to their clients, global asset manager Russell Investments has expanded its tax-managed fund line-up with the introduction of the Russell Tax-Managed International Equity Fund and the Russell Tax Exempt High Yield Bond Fund. The two new funds will be incorporated into Russell Investments’ Tax-Managed Model Strategies in June as part of an overall strategic asset reallocation of the five model portfolios that will result in each model portfolio’s allocation to tax-aware funds exceeding 90%.

“Tax management is an important topic for investors and, for more than three decades Russell Investments has provided tax-aware investment solutions that help advisors and their clients minimize their tax exposure and maximize their investment dollars,” said Phill Rogerson, managing director, consulting and product, for Russell Investments’ U.S. advisor-sold business. “With investors and their advisors more focused than ever on outcomes such as financial security in retirement, every dollar saved in taxes is one that can be put toward an investor’s goals. It’s precisely for this reason that we expanded the suite of investment solutions that can help investors grow their after-tax wealth more efficiently.”

For advisors looking to help clients grow after-tax wealth, Russell Investments offers several ways to access its tax-managed capabilities, including:

  1. Total portfolio solutions (Russell Tax-Managed Model Strategies)
  2. Individual funds focused on U.S. large cap, mid and small cap, and tax exempt bonds, as well as the two new funds focused on international equities and tax-exempt high yield

The new Russell Tax-Managed International Equity Fund is currently one of the only tax-managed, multi-manager international equity mutual funds available to investors. It seeks to deliver long-term capital growth on an after-tax basis, and invests principally in depositary receipts and equity securities issued by companies economically tied to non-U.S. countries in both developed and emerging markets. Jon Eggins, senior portfolio manager at Russell Investments, manages the new fund, which employs a range of tax-management strategies, including managing holding periods and yield, tax-lot swapping, tax-loss harvesting, minimizing wash sales and more, as appropriate.

“Tax-managed investing today is more than just municipal bonds and U.S. stocks. It’s now available globally,” said Eggins. “Developed and emerging markets are accessible in one fund, which provides uncommon tax-managed access to emerging markets. Typically it is more tax-efficient to combine sub-asset classes that are not perfectly correlated, as it increases opportunities for tax-loss harvesting in one to offset gains in another.”

The Russell Tax Exempt High Yield Bond Fund is a multi-manager fund providing access to tax-exempt high yield municipal debt securities. Kevin Lo serves as portfolio manager for the fund, which recognizes that high yield bonds have historically produced tax-equivalent returns similar to equities at half of the volatility, albeit with some increased risk, and is designed to create an opportunity for higher tax-exempt income by investing 30-60% of its assets in municipal bonds that are ‘below investment grade’. The primary purpose of the fund is to provide a high level of current income that is tax-exempt, but it will also focus on providing total return.

Strategic Asset Reallocation in the Russell Tax-Managed Model Strategies

Russell Tax-Managed Model Strategies offer broad diversification, access to some of the world’s leading managers and strategies, and dynamic portfolio management. The strategic asset reallocation of the portfolios, effective June 1, will increase the tax-efficiency design of the models via allocations of between 91% and 96% to tax-aware funds, depending on the model strategy.

In part, this will be accomplished via the addition of the two new funds, the Russell Tax-Managed International Equity Fund and Russell Tax Exempt High Yield Bond Fund:

  • The Russell Tax-Managed International Equity Fund will replace the Russell International Developed Markets Fund and the Russell Emerging Markets Fund.
  • The Russell Tax Exempt High Yield Bond Fund will replace the Russell Global Opportunistic Credit Fund.

The Russell Global Infrastructure Fund is also being added to the Russell Tax-Managed Model Strategies to potentially enhance return and contribute to portfolio diversification.

“The reallocated Russell Tax-Managed Model Strategies represent our best thinking on tax-aware total portfolio solutions and are rooted in Russell Investments’ globally diversified, multi-asset investment approach,” explained Rogerson. “This asset allocation is optimized with our enhanced portfolio implementation strategy in the tax-managed equity funds, allowing for trading efficiencies, as well as enhanced tax-management capabilities across the portfolio, including addressing the concerns of capital gains associated with trading single manager funds. Ultimately, we aim to deliver the end investor with a disciplined approach to managing taxes that can help them achieve their investment outcomes.”

More insights on tax-managed investing can be found on the Helping Advisors Blog or the Insights & Research section of russell.com.

About Russell Investments

Russell Investments 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 Investments 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, asset allocation, portfolio implementation and factor exposures to help each achieve their desired investment outcomes.

Russell Investments has more than $272 billion in assets under management (as of 12/31/2014) 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 Investments has $2.4 trillion in assets under advisement (as of 12/31/2014). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell Investments traded more than $1.7 trillion in 2014 through its implementation services business. Russell Investments 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.

Headquartered in Seattle, Washington, Russell Investments is wholly owned by London Stock Exchange Group (LSEG) and operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Milan, Dubai, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, Milwaukee and Edinburgh. For more information about how Russell Investments helps to improve financial security for people, visit www.russell.com or follow @Russell_News.

Fund objectives, risks, charges and expenses should be carefully considered before investing. A summary prospectus, if available, or a prospectus containing this and other important information can be obtained by calling 800-787-7354 or by visiting www.russell.com. Please read a prospectus carefully before investing.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.

Income from funds managed for tax-efficiency may be subject to an alternative minimum tax, and/or any applicable state and local taxes.

Mutual fund investing involves risk, principal loss is possible.

Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets.

Model Strategies represent target allocations of Russell funds; these models are not managed and cannot be invested in directly. You and your financial advisor may work to combine selected funds that differ from the illustrated combinations depending upon individual investment objectives. Model Strategies are exposed to the specific risks of the funds directly proportionate to their fund allocation. The funds comprising the strategies and the allocations to those funds have changed over time and may change in the future.

All underlying third-party money managers of Russell tax-managed equity funds are non-discretionary money managers. Russell Investment Management Company (Russell) manages the respective portions of the fund’s assets based upon model portfolios provided by each firm.

Tax-efficiency is not a stated objective of the Russell Global Real Estate Securities Fund, the Russell Global Infrastructure Fund, or the Russell Global Opportunistic Credit Fund.

The Russell Tax-Managed International Equity Fund and the Russell Tax Exempt High Yield Bond Fund are new funds without an operating history, which may result in additional risk. There can be no assurance that a new fund will grow to an economically viable size, in which case the fund may cease operations. In such an event, investors may be required to liquidate or transfer their investments at an inopportune time.

Bond investors should carefully consider risks such as interest rate, credit, default and duration risks. Greater risk, such as increased volatility, limited liquidity, prepayment, non-payment and increased default risk, is inherent in portfolios that invest in high yield ("junk") bonds or mortgage-backed securities, especially mortgage-backed securities with exposure to sub-prime mortgages. Generally, when interest rates rise, prices of fixed income securities fall. Interest rates in the United States are at, or near, historic lows, which may increase a Fund's exposure to risks associated with rising rates. Investment in non-U.S. and emerging market securities is subject to the risk of currency fluctuations and to economic and political risks associated with such foreign countries.

Investments that are allocated across multiple types of securities may be exposed to a variety of risks based on the asset classes, investment styles, market sectors, and size of companies preferred by the investment managers. Investors should consider how the combined risks impact their total investment portfolio and understand that different risks can lead to varying financial consequences, including loss of principal. Please see a prospectus for further details.

Russell Investments is a trade name and registered trademark of Frank Russell Company, a USA corporation, which operates through subsidiaries worldwide and is part of London Stock Exchange Group.

The Russell logo is a trademark and service mark of Russell Investments.

Securities products and services offered through Russell Financial Services, Inc., member FINRA, part of Russell Investments.

Copyright © Russell Investments 2015. All rights reserved.

First used: June 2015
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Contacts

Russell Investments
Kate Stouffer Bauman, 206-505-1858
kstouffer@russell.com
or
Davis MacMillan, 718-801-8862
russell@neibartgroup.com
or
For real-time news updates, follow @Russell_News on Twitter.

Release Summary

New Russell Tax-Managed International Equity Fund and Russell Tax Exempt High Yield Bond Fund join Russell Tax-Managed Model Strategies.

Contacts

Russell Investments
Kate Stouffer Bauman, 206-505-1858
kstouffer@russell.com
or
Davis MacMillan, 718-801-8862
russell@neibartgroup.com
or
For real-time news updates, follow @Russell_News on Twitter.