Products August 16, 2011

Russell Offers Tutorial on Performing a Hedge Fund “Tune Up”

Russell Investments has released a video tutorial which provides institutional investors with an overview of how to give a portfolio a “hedge fund tune up.”
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The process is designed to help institutional investors determine if their portfolios are positioned not only to deal with the realities of the investment landscape today, but also to meet specific future investment objectives. The video features Darren Spencer, director, alternative investment strategies, discussing the five key areas of a hedge fund tune up process: investment policy development, strategy allocation, manager selection, portfolio construction and risk management.   

Spencer says clients can use the tune up process to: 

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  • enhance portfolio structure by combining direct investments with fund of funds, allowing them to take advantage of particular manager skill sets
  • enhance return potential by making better use of opportunistic strategies such as taking advantage of fiscal imbalances, divergent growth between developed and emerging economies, or the unwinding of central bank liquidity
  • ensure they are using the hedge fund portion of a portfolio in the most optimal way, including considering options such as the use of separately managed accounts to improve transparency
The tutorial can be found at http://www.russell.com/Institutional/investment_solutions/alternative_investing.asp.
Products August 16, 2011

Principal Introduces LDI Solution

Principal Global Investors, along with the retirement and actuarial services division of the Principal Financial Group, has launched “LDI 2.0.”
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The solution is a customizable liability driven investment (LDI) strategy that allows a plan sponsor to vary the speed of plan de-risking based on the level of interest rates and its funding status. 

LDI 2.0 relies on the implementation of two dimensions of liability driven investing, reports Principal: the traditional asset allocation glidepath that transitions a pension plan from a high equity allocation to high fixed income allocation as the plan’s funding ratio improves, and the transition of the fixed income allocation from core to long duration as interest rates rise. In addition to gaining access to Principal Global Investors’ expertise, defined benefit plan sponsors utilizing an LDI 2.0 solution also have the option to tap into the actuarial expertise within The Principal’s retirement and investor services.   

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The announcement noted that in today’s investing environment, a traditional LDI approach is less attractive. Plan sponsors and investors are seeking a customized, flexible and actionable LDI strategy that allows for a comfortable pace of plan de-risking based on funding status and interest rates.   

“The right LDI solution is different for each plan sponsor, and will vary based on a sponsor’s primary concerns, which may include the level of underfunding, the volatility of funding status or the level of interest rates,” said Mark Cernicky, product specialist with Principal Global Fixed Income. 

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