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Applying Multi Manager to Islamic InvestmentsApplying Multi Manager to Islamic Investments
Shamindra Perera CFA, Managing Director, Russell InvestmentsShamindra Perera CFA, Managing Director, Russell Investments 28 November 200728 November 2007
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Investment Strategy & Advice: Advising approximately $2.4 trillion*, with over 450 clients globally
Indexes: Benchmark for $4 trillion in assets
Funds: $231 billion in assets under management globally.
Manager Selection: An average of 17 in-depth meetings a day in 2006
Multi-Manager Funds: Over 25 years experience representing approx. 21% market share**
Implementation Services: Global client base with $400 billion in assets***
Russell I nvestmentsExperts I n The People That Manage Money
Tacoma 1936
New York 1969
London 1979
Toronto 1984
Tokyo 1986
Sydney 1986
Auckland 1991
Paris 1994
Amsterdam 1996
Singapore 1999
Johannesburg 2000
Geneva 2001
INDUSTRY RECOGNITION
Manager-of-Manager of the Year 2007
PlanSponsorTM Survey 2007
Multi-Manager of the Year 2006
Alternatives Manager of the Year 2006
Multi-Manager of the Year 2006
Transition Management Survey 2007
As at 30 September 2007 *As at 31 December 2006 * *Source: Cerulli Associates Quantitative Update – Global Multi-Manager Products 2006 * **Relates to Overlay Services clients as at 31 Dec 2006. All other information sourced from Russell Investments
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Why Multi-Manager?No-one is Best at Everything
Source: Athens 2004 Olympic Games
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Olympic Champion 8.59m9.85s 21.16m 2.36m 44.00s 12.91s 69.89m 5.95m 86.50m 3:34.18
Decathlon Champion 7.84m10.85s 16.36m 2.12m 48.36s 14.05s 48.72m 70.52m 4:40.01
Event 100m Long Jump
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400m 110m Hurdles
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Applying Russell Multi-Manager to Shariah Compliant Investing
Guiding principles
Hire managers from the entire universe, not only Shariah compliant managers
Managers focus on managing assets, not Shariah compliance
Apply a single high standard of Shariah investment across all managers
In practice
Managers researched and hired by Russell, Global Leader in Multi Manager Investing. Managers replaced when necessary.
Russell’s Shariah Board formulate and approve Shariah guidelines
Russell provides managers with a list of investable stocks, not Shariah guidelines
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Shariah Compliance
Board Members Sheikh Dr. Abdullah Al Mutlaq (Saudi Arabia) Chairman
Sheikh Dr. Mohamed Ali Elgari (Saudi Arabia)
Dr. Mohammed Daud Bakar (Malaysia)
Sheikh Esam Mohammed Ishaq (Bahrain)
Single process for all managers Board approves investment guidelines
Board approves approve purification method
Broad universe of stocks is screened for compliance
Managers select securities from a single list
Manager portfolios continuously monitored for compliance
Board certifies Shariah compliance
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Russell Shariah World Equity FundManager Process Characteristics
MANAGERFund
Weight (%)
Fund
amen
tal
Shor
t Ter
m
Syst
emat
ic
Gro
wth
Top
Dow
n
NUMBEROF
STOCKS
VALUATION/GROWTH
SIZE TURNOVER
McKinley 30 50-70High forecast growth & EPS
variabilitySmall Cap Medium
Legg Mason 40 60-80Low Valuation, depressed
marginsMid/Large Low
Arrowstreet 30 100-150High dividend yield, high price
momentumVariable High
Tech
nica
l
Long
term
Judg
emen
tal
Valu
e
Botto
m U
p
Source: Russell Investments As at: 31st March 2007
TECHNICAL: exploits opportunities created by behavioural anomalies in the market
FUNDAMENTAL: capitalises on superior analysis of companies and securities
LONG TERM: security decisions usually assessed over time horizons longer than 2 years
SHORT TERM: security decisions reviewed over time horizons less than 2 years
JUDGEMENTAL: flexible or pragmatic processes that rely on knowledge or experience of individuals or teams
SYSTEMATIC: security selections driven by a systematic, usually quantitative, assessment process with limited scope for variation in implementation
VALUE: relies on analysis of valuation metrics such as price/book
GROWTH: depends on superior forecasting of earnings or cashflow growth
TOP DOWN: forecasts macroeconomic trends expected to drive asset class, country, sector and security returns
BOTTOM UP: focuses on individual securities, with less sensitivity to macro themes and asset class, country or sector returns
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Russell Shariah Emerging Markets Equity FundManager Process Characteristics
Source: Russell Investments Correct as at 31st March , 2007
MANAGERFund
Weight (%)
Fund
amen
tal
Shor
t Ter
m
Syst
emat
ic
Gro
wth
Top
Dow
n
NUMBEROF
STOCKS
VALUATION/GROWTH
SIZE TURNOVER
Legg Mason 40 60-80Low price/cash, High 5-year
ROEVariable Low/Medium
Principal 20 80-150Low PE, high EPS variability,
high L-T EPS growthMid-cap Medium/High
SWIP 40 25-40Low DY, high long term EPS
growthLarge cap Medium
Tech
nica
l
Long
term
Judg
emen
tal
Valu
e
Botto
m U
p
TECHNICAL: exploits opportunities created by behavioural anomalies in the market
FUNDAMENTAL: capitalises on superior analysis of companies and securities
LONG TERM: security decisions usually assessed over time horizons longer than 2 years
SHORT TERM: security decisions reviewed over time horizons less than 2 years
JUDGEMENTAL: flexible or pragmatic processes that rely on knowledge or experience of individuals or teams
SYSTEMATIC: security selections driven by a systematic, usually quantitative, assessment process with limited scope for variation in implementation
VALUE: relies on analysis of valuation metrics such as price/book
GROWTH: depends on superior forecasting of earnings or cashflow growth
TOP DOWN: forecasts macroeconomic trends expected to drive asset class, country, sector and security returns
BOTTOM UP: focuses on individual securities, with less sensitivity to macro themes and asset class, country or sector returns
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Russell Investments Limited Disclaimer
This material does not constitute an offer or invitation: to anyone in any jurisdiction to invest in any Russell product or use any Russell services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so; or to anyone to whom it is unlawful to make such offer or invitation, and has not been prepared in connection with any such offer or invitation.
This material is not intended for distribution to retail clients. Unless otherwise specified, Russell is the source of all data. Unless otherwise specified, all information contained in this material is current at the time of issue and to the best of our knowledge all information presented is accurate, however this cannot be guaranteed. Any opinions expressed are those of Russell Investments Limited and not a statement of fact and they do not constitute investment advice and are subject to change. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. There is no guarantee that any target or projected figures will be met and this information is for illustrative purposes only. Any simulated figures and estimated figures are for illustrative purposes only. Any past performance figures are not necessarily a guide to future performance. Any reference to returns linked to currencies may increase or decrease as a result of currency fluctuations. Any references to tax treatments depend on the circumstances of the individual client and may be subject to change in the future. Copyright © 2007 Russell Investments LimitedIssued by Russell Investments Limited. Company No. 02086230. Registered in England and Wales with registered office at: Rex House, 10 Regent Street, London SW1Y 4PE. Telephone 020 7024 6000. Authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
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