Russell Investments plans to refrain from releasing further products this year and instead devote time to its education strategy for bond exchange-traded funds (ETF).
The investment manager recently launched its bond ETF education hub and online asset modeller for advisers and investors, with regular webinars, model portfolios and a quarterly tilting service set to follow.
“We want to focus more of our time and money on education and less on product,” Russell director of Australasian ETF product development Amanda Skelly told InvestorDaily.
“You won’t see a lot of new products from us this year, if any, as this will be our focus.”
The ETF education hub includes bond basics, information on the application of bonds in portfolios, bond risks compared to other asset classes, case studies and the asset modeller tool.
Russell expected a reasonable take up of bond ETFs in Australia and anticipated growth of up to $500 million within the first 12 months, Skelly said.
“We believe it’s not beyond the realm of possibility, based on the interest we’ve seen in our research in building our bond ETFs,” she said.
“Also in the recent weeks of launch, while the volumes have been low, we’ve actually been inundated with requests for more information on bonds and it’s been quite surprising that the requests were more sophisticated than what we had actually expected in the early weeks.”
She said advisers and self-managed superannuation fund (SMSF) trustees were among those with questions for the group.
They were interested in statistics around duration, yield to maturity and running yields, which demonstrated a strong familiarity with direct share trading and an understanding of the general concept of ETFs, she said.
“They must be familiar with ETFs if their first questions are around bond statistics, so they’re already over the hurdle of how the ETF works,” she said.
Bond ETFs currently stood as a retail proposition as brokers, advisers and SMSF investors would be most likely to buy them, she said.
“Brokers are really looking for another part of the defensive portfolio to offer to their clients in addition to hybrids and cash, advisers are looking to decrease costs to their business and SMSF investors are still [heavily weighted] in cash and are now wondering what to do with it,” she said.
