Russell implements new distribution model in Canada driven by demand for mutual fund alternatives

Date: Wednesday, December 22, 2004

In response to demand from advisors and individual investors, Russell Investment Group will expand its distribution strategy for LifePoints(R) Portfolios, a multi-manager, fund-of-funds investment offering. Starting January 1, 2005, individual investors with as little as $5,000, will be able to invest in LifePoints through investment advisors and financial planners throughout the country. LifePoints provides the diversification benefits of mutual funds, while providing a more efficient and streamlined way of managing an asset allocated portfolio. This is the first time that Russell has moved from its traditional distribution strategy of offering the LifePoints Portfolios investment program strictly through strategic alliances with a select number of bank and brokerage firms. Through these relationships, LifePoints was made available to individual investors in 2000. Since that time assets under management have grown to over $2.7 billion. LifePoints is also available to many Canadian investors as an investment option in their company's defined contribution pension plan. In 2002 LifePoints Portfolios was recognized by Investor Economics; "the league leading (Frank) Russell LifePoints program had the highest growth rate in the Mutual Funds of Funds category...this achievement is all the more remarkable because the product is sold not through proprietary distribution, but through unrelated full-service brokers and branch-based advisors." In 2003, Investor Economics once again recognized the growth of LifePoints Portfolios; "One noteable exception is Russell's LifePoints, the only third- party offering that has gained significant traction. LifePoints jumped three places on the asset ladder and stands well up in the growth rankings." "Market disappointment and the historic challenges of stand-alone mutual fund portfolios have accelerated the trend towards diversified, asset allocated fund-of-fund products. By opening up client and advisor access to LifePoints, we are responding to this long-term investment trend and giving every investor in Canada the opportunity to benefit from our time-tested and disciplined investment process which has remained steadfast since our inception," comments Joe Perrin, President and Managing Director of Russell Canada. LifePoints provides some of the benefits of traditional mutual funds (access to professional management, security diversification, and liquidity) but alleviates some of the historic challenges of investing in mutual funds. One of the major challenges is the enormous amount of initial research and on-going monitoring which is required by advisors or investors to determine which funds to buy and maintain in their portfolios. "Typically the information which is readily available to the average investor is superficial, performance-focused and backwards looking," notes Tim Hicks, Chief Investment Office for Russell Canada. "To add to the challenge, continual monitoring and review of the selected mutual funds is needed to ensure that they are still abiding by their original investment mandates. And knowing when a mutual fund should be terminated and replaced with another is a third research challenge. Not many have the adequate time, resources or access to in-depth information to perform this on-going and important due diligence." "Russell's core competency for over 30 years has been manager research," adds Perrin. "No other firm in the world applies more resources or attention to this function. We have over 70 globally-based research analysts whose sole purpose is to research and evaluate money managers. The access and accumulated knowledge and insight we have into money management communities the world-over is a fundamental advantage and key differentiator of LifePoints, compared to any other investment program available to Canadian investors."