Officials at Russell Investments say prospective institutional clients are taking a new look at the firm now that the ownership question has been resolved.
There has been renewed interest among asset owners in its biggest business — managing outsourced assets for pension plans, foundations and endowments — since the London Stock Exchange Group's announcement in October that it had sold the investment manager/ consultant to private equity firm TA Associates for $1.15 billion.
“We could be sympathetic with people ... until there was some certainty in the transaction (the sale of Russell), they might have been uncomfortable,” said Russell CEO Len Brennan in a recent interview at the firm's headquarters in Seattle. “That (uncertainty's) been removed.”
Mr. Brennan said prospective clients “are very much back at the table,” evaluating Russell as an option for its outsourced chief investment officer services.
Russell officials would not say if any of the prospects had hired the firm. According to a Pensions & Investments survey, Russell managed $117.3 billion in worldwide institutional OCIO assets as of March 31, 2015, ranking it No. 1. Other Russell businesses include $76 billion in derivatives and currency overlays, a $35.5 billion mutual fund business and $6 billion-plus in target-date funds.
Russell also is a consultant to institutional investors; it had $2.3 trillion in worldwide assets under advisement as of June 30, 2015, ranking it No. 4 on P&I's list.
Russell Investments was a pioneer of investment outsourcing more three decades ago, enticing investors with it multimanager funds. Today, the firm lists 340 offerings using dozens of different asset managers.
While Russell's outsourcing assets had grown less than 2% in the year ended March 31, 2015, other key competitors including second-ranked Mercer have grown rapidly. Mercer's $111.8 billion in worldwide institutional OCIO assets as of March 31, 2015, was up 22% from the previous year.
Russell's time in the penalty box goes back to January 2014, when its owner, Northwestern Mutual Life Insurance Co., announced it was considering selling the firm, said consultant Martha Tejera, founder and project manager at Tejera & Associates LLC, Seattle.
Ms. Tejera said most institutional investors had written off Russell because of the uncertainty surrounding the sale. “They have a long history, which is compelling,” said Ms. Tejera of Russell. But once she informed asset owners of the potential sale, 80% of them said, “let's not look at them right now,“ she said.
Ms. Tejera said concerns about hiring Russell continued after the London Stock Exchange Group purchased the firm because it was widely believed by industry observers that LSE Group would sell the investment management and consulting business, keeping only the index unit.
And they were right. In December 2014, two months after completing its purchase of Russell Investments, LSE Group announced it was selling the investment management business.