TACOMA, Wash. -- Russell/Mellon Analytical Services' has released into the public domain the math formula behind its performance attribution software via its Web site.
The Russell algorithm has potential to become a standard in the industry and ultimately might allow the company to attract new clients, said Mark Hansen, managing director for sales and client service. "It will be out there for competitors and clients," he said.
Frank Russell made public its Ankrim/Hensel methodology years ago, but this is the first release of the company's method for linking single-period attribution results over time, which is the intellectual backbone of the Frank Russell Co.'s newly integrated software platform that is part of a joint venture with Mellon Trust.
Russell expects attribution software providers to pick up their algorithm, but ultimately don't think it will create serious competition to their already established software.
Although the company intends to gain clients and notoriety by publishing its previously proprietary algorithm in an upcoming issue of the Journal of Performance Measurement, other performance attribution software providers greeted the release with yawns.
Deborah Williams, research director at Newton, Mass.-based Meridien Research, said that while most algorithms tend to be proprietary, Frank Russell would be less susceptible to eroding a source of revenue than, say, a firm like Berkeley, Calif.-based BARRA Inc., which depends more on software sales.
Ms. Williams believes it is unlikely other firms will pick it up, noting that it is possible the release of the formula might make it easier for competitors to poke holes in Russell/Mellon's software.
Lisa Stanton, BARRA's director of equity sales and client relationships, believes the release of the formula is a way to clarify Russell's place in the marketplace. BARRA, as other software providers do, provides the specific math behind its performance software as a standard practice. Ms. Stanton doubts anyone would pick up the methodology and create new software because of the intensive and intricate analytical data collection and other work involved.