Russell Investments Multi-Asset Income Strategy Fund — Class A (RIM0089AU) Report & Performance

What is the Russell Investments Multi-Asset Income Strategy Fund — Class A fund?

Russell Investments Multi-Asset Income Strategy Fund — Class A to provide a return (after fees and costs) of 2% pa above inflation over the short to medium term with a focus on income and risk management. The Fund is diversified across a range of asset classes, including equities, fixed income and alternatives, with a dynamic approach to asset allocation. Derivatives may be used to implement investment strategies.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Russell Investments Multi-Asset Income Strategy Fund — Class A

Russell Investments Multi-Asset Income Strategy Fund — Class A Fund Commentary September 30, 2023

Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund (RABF) performed in line with its benchmark; though it did record negative absolute returns for the quarter. RABF benefited from a strategic overweight to credit, however this was offset by a slightly long duration exposure; positioning which was impacted by the sharp rise in government bond yields we saw over the period. The Russell Investments International Bond Fund – $A Hedged delivered negative absolute and excess returns in the third quarter. In terms of our extended fixed income exposure, Metrics Credit outperformed traditional bonds, with Australian loans continuing to generate income-like returns. The Russell Investments Australian Floating Rate Fund also performed well as floating rate assets continued to benefit from a higher interest rate environment. We believe US, UK and German government bonds offer reasonable value. In the US, the spread between two- and 10-year government bond yields is close to an extreme. The yield curve has steepened in recent months, which we had anticipated given that this tends to happen when the Fed finishes raising interest rates and markets start looking toward rate cuts. Japanese government bonds still look expensive despite the Bank of Japan’s recent announcement regarding their yield curve control policy.

The Fund’s equity portfolio was mixed over the period. In terms of global equities, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged delivered negative absolute and excess returns for the quarter. Both funds were impacted by poor stock selection in the US, including underweights to chipmaker NVIDIA Corp., oil major Exxon Mobil and pharmaceutical company Eli Lilly & Co. Stock selection in emerging markets also weighed on performance. Within our domestic equity portfolio, the Russell Investments Australian Opportunities Fund significantly underperformed its benchmark, driven in part by a material overweight to the poorperforming healthcare space. Stock selection within the sector also weighed on returns, including overweights to ResMed and New Zealand’s Fisher & Paykel Healthcare. In contrast, the Russell Investments High Dividend Australian Shares ETF generated mildly positive returns for the quarter, while Vinva’s Australian Equitised Long-Short Fund was flat. We maintain a diversified equity exposure across both global and Australian markets. Non-US developed equities are relatively cheaper than US equities and likely to benefit from weakness in the US dollar (USD) should the Fed become less hawkish. However, until the Fed does become less hawkish, we maintain a neutral preference for non-US developed equities. Elsewhere in the Fund, our exposures to global listed property and global listed infrastructure weighed on performance, while a weaker Australian dollar (relative to the USD) boosted the returns of the Fund’s assets denominated in foreign currency.

Markets have faced multiple concerns in the past 12 to 24 months; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, a slowing Chinese economy and regional banking crises in the US and Europe. Despite these events and more, the US economy has so far proven remarkably resilient, with markets continuing to price in a ‘soft landing’; though we are seeing several leading economic indicators flash warning signs. Moving forward, the main uncertainty for markets is the outlook for the US economy. Whilst economic data so far this year has proven more resilient than markets initially expected, our base case remains that a recession in the US is more likely than not. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish later this year and into 2024.

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Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Russell Investments Multi-Asset Income Strategy Fund — Class ARIM0089AUManaged FundsMulti-AssetMulti-Asset IncomeMulti-Asset - Multi-Asset Income IndexMulti-Asset Growth Investor Index44.26 M0.76%00.38%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Russell Investments Multi-Asset Income Strategy Fund — Class A2.55%4.05%8.32%3.26%4.3%4.97%5.25%4.64%-2.69%-7.79%-9.79%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Russell Investments Multi-Asset Income Strategy Fund — Class AMulti-Asset - Multi-Asset Income Index1.05%-0.13%0.11%0.01%0.01%0.91.16%1.05%0.980.98

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Russell Investments Multi-Asset Income Strategy Fund — Class AYes-https://russellinvestments.com/au-

Product Due Diligence

What is Russell Investments Multi-Asset Income Strategy Fund — Class A

Russell Investments Multi-Asset Income Strategy Fund — Class A is an Managed Funds investment product that is benchmarked against Multi-Asset Growth Investor Index and sits inside the Multi-Asset - Multi-Asset Income Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Russell Investments Multi-Asset Income Strategy Fund — Class A has Assets Under Management of 44.26 M with a management fee of 0.76%, a performance fee of 0 and a buy/sell spread fee of 0.38%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Russell Investments Multi-Asset Income Strategy Fund — Class A has returned 2.55% in the last month. The previous three years have returned 3.26% annualised and 4.64% each year since inception, which is when the Russell Investments Multi-Asset Income Strategy Fund — Class A first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Russell Investments Multi-Asset Income Strategy Fund — Class A first started, the Sharpe ratio is 0.56 with an annualised volatility of 4.64%. The maximum drawdown of the investment product in the last 12 months is -2.69% and -9.79% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Russell Investments Multi-Asset Income Strategy Fund — Class A has a 12-month excess return when compared to the Multi-Asset - Multi-Asset Income Index of 1.05% and -0.13% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Russell Investments Multi-Asset Income Strategy Fund — Class A has produced Alpha over the Multi-Asset - Multi-Asset Income Index of 0.11% in the last 12 months and 0.01% since inception.

What are similar investment products?

For a full list of investment products in the Multi-Asset - Multi-Asset Income Index category, you can click here for the Peer Investment Report.

What level of diversification will Russell Investments Multi-Asset Income Strategy Fund — Class A provide?

Russell Investments Multi-Asset Income Strategy Fund — Class A has a correlation coefficient of 0.98 and a beta of 0.9 when compared to the Multi-Asset - Multi-Asset Income Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on Russell Investments Multi-Asset Income Strategy Fund — Class A and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Russell Investments Multi-Asset Income Strategy Fund — Class A with the Multi-Asset Growth Investor Index?

For a full quantitative report on Russell Investments Multi-Asset Income Strategy Fund — Class A compared to the Multi-Asset Growth Investor Index, you can click here.

Can I sort and compare the Russell Investments Multi-Asset Income Strategy Fund — Class A to do my own analysis?

To sort and compare the Russell Investments Multi-Asset Income Strategy Fund — Class A financial metrics, please refer to the table above.

Has the Russell Investments Multi-Asset Income Strategy Fund — Class A been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in Russell Investments Multi-Asset Income Strategy Fund — Class A?

If you or your self managed super fund would like to invest in the Russell Investments Multi-Asset Income Strategy Fund — Class A please contact via phone or via email .

How do I get in contact with the Russell Investments Multi-Asset Income Strategy Fund — Class A?

If you would like to get in contact with the Russell Investments Multi-Asset Income Strategy Fund — Class A manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Russell Investments Multi-Asset Income Strategy Fund — Class A. All data and commentary for this fund is provided free of charge for our readers general information.

Historical Performance Commentary

Performance Commentary - August 31, 2023

Global bonds fell slightly in August. Contributing to the decline was speculation that US interest rates will remain higher for longer amid still high inflation and a robust jobs market. Headline inflation in the US rose 3.2% in the 12 months to 31 July, which was up slightly on the 3.0% outcome we saw in June, while core inflation slowed only slightly from 4.8% to 4.7%. At the same time, US unemployment held near record lows and wage pressures remained elevated, which will concern the Federal Reserve (Fed) since higher labour costs mean companies are more likely to raise prices. Whilst market pricing implies the Fed will leave interest rates on hold when it next meets in September, recent Fed rhetoric suggests the Bank believes its fight against inflation is far from over, with chairman Jerome Powell saying the Bank is prepared to raise interest rates further if necessary and will keep them high until it’s convinced inflation is on a sustainable path back toward its 2.0% target. Meantime, the Bank of England lifted interest rates a further 0.25% (to 5.25%) against a backdrop of persistently high inflation. Neither the European Central Bank nor the Bank of Japan met in August. In contrast, bonds benefited from a downward revision to US growth and concerns over the deteriorating economic outlook in China. Global credit markets were weaker in August, with spreads on US and European investment-grade and high-yield debt widening over the period. Australian bonds outperformed their global peers, while domestic credit spreads narrowed.

Global share markets fell (in local currency terms) in August. Australian shares were also weaker for the month.

Performance Commentary - July 31, 2023

The Fund’s equity portfolio was mixed over the period. In terms of domestic equities, both the Russell Investments Australian Opportunities Fund (RAOF) and the Vinva Australian Equitised Long-Short Fund delivered positive absolute and excess returns for the month. RAOF’s outperformance was driven in part by stock selection within the materials space, including an underweight to iron ore major Fortescue Metals Group, while Vinva’s Australian Equitised Long-Short strategy benefited largely from its valuation and quality signals. Within our global equities portfolio, the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged recorded positive absolute returns in July but narrowly underperformed their respective benchmarks. Much of the funds’ underperformance was driven by stock selection within the emerging markets space, including an ex-benchmark holding in Taiwan Semiconductor Manufacturing Co. and an underweight to South Korean steel maker POSCO. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar (USD) should the Fed become less hawkish.

Within the Fund’s traditional fixed income portfolio, the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund delivered positive absolute and excess returns for the month. Both funds benefited from a long-held overweight to credit. In terms of our extended fixed income exposure, Metrics Credit outperformed government bonds over the period, with Australian loans continuing to generate income-like returns. Global floating rate credit and the Russell Investments Australian Floating Rate Fund also performed well in July. We believe US, UK and German government bonds offer reasonable value. In the US, the spread between two- and 10-year government bond yields is close to an extreme. We believe it’s likely the yield curve will steepen in the coming months, which it tends to do when the Fed finishes raising interest rates and markets start looking toward rate cuts. Meanwhile, Japanese government bonds look expensive despite the Bank of Japan’s recent announcement regarding their yield curve control policy.

The Fund also benefited from its exposure to global and Australian listed property, while a weaker Australian dollar (relative to the USD) boosted the returns of the Fund’s assets denominated in foreign currency. In terms of overall positioning, we reduced the Fund’s exposure to global and Australian equities in July. We also added to the Fund’s duration exposure while reducing our holdings in high-yield and emerging markets debt.

Markets have faced multiple concerns in the past 12 to 24 months; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, a slowing Chinese economy and regional banking crises in the US and Europe. Moving forward, the main uncertainty for markets is the outlook for the US economy. Whilst economic data so far this year has proven more resilient than markets initially expected, our base case remains that a recession in the US is more likely than not. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish through the second half of the year.

Performance Commentary - June 30, 2023

The Fund’s equity portfolio was mixed over the period. In terms of domestic equities, the Russell Investments Australian Opportunities Fund outperformed its benchmark, benefiting from stock selection within the materials space. This included underweights to iron ore major BHP Group and diversified miner South32; both of which significantly underperformed the broader market over the period. The Russell Investments High Dividend Australian Shares ETF generated positive absolute returns for the quarter. Within our global equities portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged underperformed their respective benchmarks over the period; though they did generate strong absolute returns for the quarter. Both funds were impacted by poor stock selection in the US, including underweights to large growth names like Apple and electric car maker Tesla. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar (USD) should the US Federal Reserve (Fed) become less hawkish.

Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund recorded negative absolute returns for the quarter; though it did outperform its benchmark, benefiting in part from an overweight to credit. The Russell Investments International Bond Fund – $A Hedged delivered negative absolute and benchmark-relative performance over the period. In terms of our extended fixed income exposure, Metrics Credit performed well over the period, with Australian loans continuing to generate income-like returns. Our exposure to global high-yield debt also added value, while the Russell Investments Australian Floating Rate Fund outperformed its benchmark as floating rate assets continued to benefit from a higher interest rate environment. We believe US, UK and German government bonds offer reasonable value. In the US, the spread between two- and 10-year Treasury yields is close to an extreme. We believe it’s likely the yield curve will steepen in the coming months, which it tends to do when the Fed finishes raising interest rates and markets start looking toward rate cuts. Meanwhile, Japanese government bonds look expensive, with the Bank of Japan maintaining its 0.50% yield limit.

The Fund also benefited from its exposure to global and Australian listed property, while a weaker Australian dollar (relative to the USD) boosted the returns of the Fund’s assets denominated in foreign currency.

Markets have faced multiple concerns in the past 12 to 24 months; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, a slowing Chinese economy and regional banking crises in the US and Europe. Despite these events and more, the US economy has so far proven remarkably resilient; though we are seeing several leading economic indicators flash warning signs. Moving forward, the main uncertainty for markets is the outlook for the US economy. We believe the pace and magnitude of Fed tightening has created the risk of a recession in the next 12 to 18 months; though any potential recession is expected to be mild to moderate. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish in the second half of the year.

Performance Commentary - May 31, 2023

The Fund’s equity portfolio was mixed over the period. In terms of global equities, the Russell Investments Global Opportunities Fund delivered positive absolute returns for the month but underperformed its benchmark. Much of the Fund’s underperformance was driven by stock selection in the US; notably underweights to large cap names like NVIDIA Corp., Apple and Tesla. The Russell Investments Global Opportunities Fund – $A Hedged recorded both negative absolute and excess returns in May. Within our Australian equities portfolio, the Russell Investments Australian Opportunities Fund posted negative absolute returns in May, though it did outperform its benchmark; the Fund benefiting in part from stock selection within the energy sector. This included overweights to oil and gas producer Santos and energy retailer Ampol. In contrast, Vinva’s Australian Equitised Long-Short Fund recorded both negative absolute and excess returns over the period, driven largely by the strategy’s behavioural and segmentation signals. Meanwhile, the Russell Investments High Dividend Australian Shares ETF underperformed the broader equity market in May. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish.

Within the Fund’s traditional fixed income portfolio, the Russell Investments International Bond Fund – $A Hedged delivered both negative absolute and excess returns in May. The Russell Investments Australian Bond Fund also recorded negative absolute returns for the month, though it did perform in line with its benchmark; the Fund benefiting in part from an overweight to credit. In terms of our extended fixed income exposure, Metrics Credit performed well over the period, with Australian loans continuing to generate income-like returns. Global floating rate credit and the Russell Investments Australian Floating Rate Fund also outperformed in May. We believe government bond valuations have improved, with US Treasuries now offering good value. UK bonds have also moved into bands which we believe offer good value, as have German bunds. Japanese bond valuations have begun to improve with recent changes to the Bank of Japan’s yield curve control policy, though the Bank’s key short-term interest rate remains low at -0.10%. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff.

Meanwhile, a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency.

In terms of overall positioning, we increased the Fund’s duration exposure as bonds sold off toward the end of the month. We did this by increasing our holdings in both the Russell Investments International Bond Fund – $A Hedged and the Russell Investments Australian Bond Fund.

Markets have faced multiple concerns in the past 12 months or so; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, the impact of COVID-19 on China’s economy and, most recently, uncertainty surrounding the global banking system. Moving forward, the main uncertainty is the outlook for the US economy, with the pace and magnitude of Fed tightening creating the risk of a recession. We feel a slowdown or mild recession are the two most likely outcomes. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish through the second half of the year.

Performance Commentary - April 30, 2023

The Fund’s equity portfolio contributed positively to performance over the period. In terms of global equities, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged delivered positive absolute and excess returns in April; the two funds benefiting in part from strong stock selection in the UK.

This included ex-benchmark holdings in stockbroker Numis Corp. and price comparison website Moneysupermarket.com. Within our Australian equities portfolio, the Russell Investments Australian Opportunities Fund outperformed its benchmark on the back of strong stock selection within the materials sector; notably underweights to major miners BHP Group and Fortescue Metals Group. In contrast, Vinva’s Australian Equitised Long-Short Fund underperformed its benchmark over the period; though it did record positive absolute returns for the month.

The strategy’s valuation and quality signals weighed the most on benchmark-relative returns. Meanwhile, the Russell Investments High Dividend Australian Shares ETF performed in line with the broader equity market in April. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish.

Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund delivered positive absolute and excess returns in April, benefiting in part from its long-held overweight to credit. The Russell Investments International Bond Fund – $A Hedged was flat against its benchmark in April; though it did record positive absolute returns for the month. In terms of our extended fixed income exposure, Metrics Credit performed well over the period, with Australian loans continuing to generate income-like returns. The Russell Investments Australian Floating Rate Fund also outperformed, benefiting from a combination of running yield in excess of the benchmark and credit spread dynamics. We believe government bond valuations have improved, with US Treasuries now offering good value. UK bonds have also moved into bands which we believe offer good value, as have German bunds. Japanese bond valuations have begun to improve with recent changes to the Bank of Japan’s yield curve control policy, though the Bank’s key short-term interest rate remains low at -0.10%.

A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff. Elsewhere in the Fund, our exposures to global listed infrastructure and global and Australian listed property added value in April, while a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency.

Markets have faced multiple concerns over the past 12 months or so; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, the impact of COVID-19 on China’s economy and, most recently, uncertainty surrounding the global banking system following the collapse of several US banks and the forced sale of Credit Suisse. Moving forward, the main uncertainty is likely to remain the outlook for the US economy.

We believe the pace and magnitude of Fed tightening creates the risk of a recession by the second half of this year. While a deep recession could trigger a larger equity bear market, we feel a slowdown or mild recession are the two most likely outcomes. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish in the second half of the year

Performance Commentary - March 31, 2023

Within the Fund’s traditional fixed income portfolio, the Russell Investments Australian Bond Fund delivered positive absolute and excess returns for the quarter, benefiting from its duration positioning and an overweight to credit. The Russell Investments International Bond Fund – $A Hedged recorded positive absolute returns over the period but narrowly underperformed its benchmark. This underperformance was driven largely by interest rates positioning. In terms of our extended fixed income exposure, Metrics Credit performed well over the period, with Australian loans continuing to generate income-like returns. The Russell Investments Australian Floating Rate Fund and our exposure to global high-yield debt also added value. We believe government bond valuations have improved, with US Treasuries now offering good value.

UK bonds have also moved into bands which we believe offer good value, as have German bunds. Japanese bond valuations have begun to improve with recent changes to the Bank of Japan’s yield curve control policy, though the Bank’s key shortterm interest rate remains low at -0.10%. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff.

The Fund’s equity portfolio was mixed over the period. In terms of domestic equities, the Russell Investments Australian Opportunities Fund significantly outperformed its benchmark, benefiting from strong stock selection within the financials space. This included underweights to National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corp. and ANZ Group; collectively known as the ‘Big Four’. In contrast, Vinva’s Australian Equitised Long-Short Fund underperformed its benchmark, driven largely by the strategy’s segmentation signals. Partly offsetting this were good gains from the strategy’s quality and tactical signals. Within our global equities portfolio, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged underperformed their respective benchmarks over the period; though they did generate strong absolute returns for the quarter. Both funds were impacted by poor stock selection in the US, including underweights to large growth names like Apple, NVIDIA Corp. and electric car maker Tesla. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar should the Fed become less hawkish.

The Fund also benefited from its exposure to global and Australian listed property and global listed infrastructure; all of which benefited from the sharp decline in longer-term government bond yields we saw over the period. Meanwhile, a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency.

Markets have faced multiple concerns over the past 12 months or so; including Russia’s invasion of Ukraine, surging inflation, central bank tightening, the impact of COVID-19 on China’s economy and, most recently, uncertainty surrounding the global banking system following the collapse of several US midsize banks and the forced sale of Credit Suisse. Moving forward, the main uncertainty is likely to remain the outlook for the US economy. We believe the pace and magnitude of Fed tightening creates the risk of a recession by the second half of this year. While a deep recession could trigger a larger equity bear market, we feel a slowdown or mild recession are the two most likely outcomes. The upside risk for the US economy and markets comes from the possibility that US core inflation has peaked. This, combined with some softening in the labour market, could allow the Fed to become less hawkish in the second half of the year.

Performance Commentary - February 28, 2023

The Fund’s equity portfolio was mixed over the period. In terms of global equities, both the Russell Investments Global Opportunities Fund and the Russell Investments Global Opportunities Fund – $A Hedged underperformed their respective benchmarks in February; though the former did record positive absolute returns for the month. Both funds were impacted by poor stock selection in the US; notably underweights to large growth names like Apple, NVIDIA Corp. and electric car maker Tesla. Within our Australian equities portfolio, the Russell Investments Australian Opportunities Fund (RAOF) significantly outperformed its benchmark over the period, benefiting from strong stock selection within the materials space. This included underweights to BHP Group and Pilbara Minerals; both of which declined amid general weakness across the broader commodities complex. However, RAOF did record negative absolute returns for the month. Similarly, Vinva’s Australian Equitised Long-Short Fund recorded negative absolute returns in February but outperformed its benchmark; the strategy benefiting largely from its behavioural and segmentation signals. The Russell Investments High Dividend Australian Shares ETF underperformed the broader equity market over the period. We maintain a diversified equity exposure across both global and Australian markets. We still prefer non-US developed equities over US equities. We believe non-US developed equities are relatively cheaper and likely to benefit from weakness in the US dollar (USD) should the Fed become less hawkish.

Within the Fund’s traditional fixed income portfolio, the Russell Investments International Bond Fund – $A Hedged delivered negative absolute returns in February but narrowly outperformed its benchmark. This outperformance was driven largely by active currency positioning, including a long USD position, and an overweight to credit. The Russell Investments Australian Bond Fund was flat for the month. In terms of our extended fixed income exposure, both Metrics Credit and the Russell Investments Australian Floating Rate Fund performed well over the period; the latter continuing to benefit from running yield in excess of the benchmark. In contrast, global high-yield debt underperformed in February; though the impact of this underperformance on overall returns was relatively modest given that we recently trimmed the Fund’s global high-yield debt exposure. We believe government bond valuations have improved, with US Treasuries now offering good value. UK bonds have also moved into bands which we believe offer good value, as have German bunds. Japanese bond valuations have begun to improve with recent changes to the Bank of Japan’s yield curve control policy, though the Bank’s key short-term interest rate remains low at -0.10%. A positive for government bonds is that we believe markets have fully priced in hawkish outlooks for most central banks. In our view, this should limit the extent of any further selloff.

Elsewhere in the Fund, our exposure to global and Australian listed property weighed on overall performance as government bond yields jumped on the back of US rate hike expectations. Meanwhile, a weaker Australian dollar boosted the returns of the Fund’s assets denominated in foreign currency.

Moving forward, recession fears and central bank tightening will continue to drive market volatility. Share markets had bounced considerably off their recent lows amid expectations inflation may have peaked, however February saw a reversal of this trend as economic data revealed inflation is proving to be more persistent. We acknowledge that heightened short-term market volatility is likely to remain given responses across markets to ongoing inflation prints and central bank rate hike decisions.

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