Russell Investment Group's overlay services business nearly tripled to $14 billion in calendar year 2005 from $5 billion, said Michael Thomas, director of overlay services. Half the increase came from shifting the beta exposure in portable alpha strategies - from a level of zero a year ago. The remaining half comes from policy implementation, such as a service that combines rebalancing with cash equitization, cash equitization on a stand-alone basis, synthetic rebalancing and currency overlays.
Russell's overlay services have added an average 21 basis points to pension fund returns, net of transaction costs, during the last three years, while reducing tracking error at the total fund level, he said. Russell's total client assets using the service grew to $250 billion from $100 billion last year.