Frank Russell has added Scudder to its existing manager line-up for the $1.2bn Russell Japan equity ...
Frank Russell has added Scudder to its existing manager line-up for the $1.2bn Russell Japan equity portfolio it runs.
Scudder will manage 22% of the yen-denominated funds, which are domiciled in Japan and Dublin, along with JP Morgan and Jardine Fleming, which each manage 27.5%, and TCW which manages 22.5%.
Russell Funds found the level of risk in the fund had been increasing since the start of 1999 and has attributed this to the increased volatility and extreme polarisation of the Japanese equity market. This was exacerbated by the two style-special managers, TCW, a value house and Jardine Fleming a growth player, with the main structural bias resulting in the fund having an excessive exposure to very high growth and deep value companies on valuation measures.
Robert Barr, director of strategic relationships at Russell, said: "To reduce risk to levels consistent with the objectives of the fund, we believe that it is appropriate to add a fourth manager to the fund.
"Our main objective when selecting this manager was to reduce exposure to valuation extremes, and we believe that this is best achieved by the inclusion of a second market-oriented manager."
Scudder's portfolio construction and risk control disciplines ensure the portfolios do not display substantial biases, and that where biases do exist, they are supported by the thematic overlay.
Risk controls are comprehensive and include detailed scenario analysis to assess sensitivity to key economic variables. Although sector bets can be sizeable, overall sector deviation tends to be in line with the universe median. Barr said: "This change in the manager structure should improve the overall risk profile of the fund, without reducing its long-term potential to produce above benchmark returns. By further diversifying the fund and reducing our manager specific risk, we expect to dilute the influence of the style-specialist managers while simultaneously providing an additional source of excess return, complementary to the existing managers."
All-day event on 24 April
Consequences could be more severe than in stress tests
AFH has six segregated mandate funds
Variable operating expenses