According to a news release from the Tacoma, Washington firm, the move comes in response to demand from public and corporate pensions plans and other institutional investors interested in supporting the so-called “developing” manager talent.
For example, this week the California State Teachers’ Retirement System (CalSTRS) announced Russell as one of three firms to provide investment services to the pension fund’s Developing Managers Program. Russell received an equity assignment from CalSTRS as part of the fund’s $600 million Developing Managers Program.
“This CalSTRS assignment is a timely proof statement about the growing importance of smaller, diverse and developing investment management firms,” Craig Ueland , Russell president and CEO-elect said in a statement. “We know institutional investors often want to support small businesses and yet are required to seek insightful managers as part of their investment policy. Our role is to offer them responsible and thoroughly researched access to these developing firms.”
Developing managers are defined as investment management firms with $2 billion or less under management. Some developing firms may oversee as little as $10 million. By comparison, larger, well-known investment management firms often manage more than $50 billion or more. Some developing manager firms also are owned by women or minorities – a feature that also appeals to some institutional investment organizations.
“Our aim is to find smaller, high-quality investment firms that are still in the relatively early stages of their business development,” said Tereasa Gandhi, senior research analyst at Russell Investment Group. “These managers tend to be very entrepreneurial, passionate about investments, and flexible due to smaller asset bases. All of this can contribute to winning performance for developing managers who also have a solid investment proposition.”
Russell’s research of investment managers encompasses more than 1,500 specialist managers and 3,500 investment products worldwide.