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Russell Rolls Out Series of Target Duration LDI Funds

August 7, 2012 (PLANSPONSOR.com) – Russell Investments unveiled a series of six target-duration liability-driven investing (LDI) commingled trust funds.

By Jay Polansky editors@plansponsor.com | August 07, 2012

Each LDI fund will be benchmarked to a comparable composite of the Barclays-Russell LDI Index Series.

The Russell Target Duration LDI Funds seek to provide high quality, mostly corporate bond-based exposure to fixed-income securities which closely match those found in discount curves used to value U.S. pension liabilities. The funds are designed to be used in combination as part of an overall LDI program, but also aim to achieve modest outperformance versus their respective Barclays-Russell LDI indices by combining diversified adviser styles and strategies over a full market cycle.

“The new Russell Target Duration LDI Funds act as building blocks to create client-specific LDI strategies that provide a closer cash flow match of assets to liabilities than can be achieved through a single long credit strategy,” said Martin Jaugietis, CFA and director, head of LDI solutions. “They also contain less mark-to-market basis risk versus liabilities discounted using a corporate yield curve than comparable swaps-based target duration funds.”

The fund names will reflect target durations:  

  •       Russell 6-Year LDI Fixed Income Fund
  •       Russell 8-Year LDI Fixed Income Fund
  •       Russell 10-Year LDI Fixed Income Fund
  •       Russell 12-Year LDI Fixed Income Fund
  •       Russell 14-Year LDI Fixed Income Fund
  •       Russell 16-Year LDI Fixed Income Fund

 

Calvin (Chenglong) Gong, CFA, FSA and CMT, serves as the portfolio manager for Russell’s overall LDI solution set, including the combined Target Duration LDI Fund series, while Gerard Fitzpatrick, CFA and FRM, serves as the portfolio manager for each individual LDI fund. As the portfolio manager responsible for the LDI hedging solution for U.S. institutional clients, Gong works closely with Jaugietis and reports to Jeff Hussey, Global Chief Investment Officer, Fixed Income.  

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