The portfolio starts with an asset allocation of 60% Canadian equities and 40% fixed income, but can adapt to changing market conditions using Russell’s Enhanced Asset Allocation (EAA) model – which allows the portfolio’s weightings to be adjusted and outline a path to potentially higher returns, based on the market insight of Russell’s investment team.
Moreover, the portfolio features allocations to the Russell fixed income pool, the Russell core plus fixed income pool, the Russell Canadian dividend pool and the Russell Canadian equity pool (with potential foreign equity exposure up to a maximum of 30%). It is also available in a corporate class series.
Although EAA is a new investment model in Canada, it is an asset allocation innovation that has been researched and developed at Russell for over 15 years. Russell has an extensive and successful history of combining capital market insights with portfolio management decisions.
Greg Nott, portfolio manager at Russell Canada, said: “EAA is an evolutionary step in our approach to asset allocation. It retains the long-term benefit of strategic asset allocation, fits into the existing portfolio structure and utilizes robust risk management. EAA has already been well-received by institutional clients globally and we are very excited to now deliver this unique offering to our retail clients in the Russell Enhanced Canadian Growth and Income Portfolio.
“The EAA model is not there to dominate the overall portfolio. Rather, it is designed to seek improved returns for clients by purposely tilting the portfolio to take advantage of Russell’s insights into the current relative valuation of asset classes, while still managing risk and liquidity.
“The portfolio’s use of EAA essentially takes advantage of Russell’s investment expertise across the globe by tilting portfolios to capture the views and forecasts of asset class returns. For instance, the portfolio could tilt the equity/ bond balance or the Canadian equity/ non-Canadian equity balance if a significant opportunity to add value is identified.”
