The final stage of our investment process is the selection and combination of managers for our multi manager funds. The managers in the Russell Investments multi manager funds have distinctive investment processes, beliefs and styles. The key to our success is our ability to combine these managers so that we capitalise on their skills in generating outperformance. We combine managers with complementary style characteristics to produce funds that perform consistently well. We strive to deliver returns with much lower benchmark relative volatility than traditional, single active managers. The combination process uses a number of tools, developed by Russell over the last 25 years, to ensure that the funds perform consistently in a variety of market environments. It also draws upon Russell Investments' 30 years of manager research to understand how managers behave in differing conditions. Our portfolio managers and analysts are responsible for monitoring and reviewing the structure of our funds as well as the suitability of our managers on an ongoing basis. Our ongoing manager research allows us not only to select our favoured managers, but also to run a “substitutes bench” of replacement managers in the event we need to change a manager. Our portfolio managers and analysts have regular meetings with the underlying managers of the portfolios. Ad-hoc meetings may be called to discuss any industry changes and events, change in personnel or changes in investment process. There are a variety of possible catalysts for changing managers. While it may seem counter intuitive, we rarely terminate a manager due to poor performance. Most manager changes result from our views on the likely impact on future performance of changes in the investment team or the process, or because we have discovered an alternative manager with an even more compelling approach. We typically turnover about 10-15% of the managers annually. Manager replacements normally take place swiftly and cost-effectively, using our own specialist transition team.

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