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Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
Investment Manager Outlook
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Investment Manager Outlook

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  • 1. Investment Manager Outlook Date: June 2009 Author: Sadiq S. Adatia, CFA, Chief Investment Officer Country: Canada Synopsis: Russell’s quarterly survey of Canadian investment managers and their views of the market.
  • 2. RuSSell InveStment mAnAgeR OutlOOk Summary of key findings key trends / June 2009 Investment manager Survey* Cash Materials High Yield Bonds Emerging Markets & Financials MORE BEARISH MORE MORE MORE BULLISH BULLISH BULLISH *Compared to survey results from Q1 2009 Investment manager Outlook Poll. Despite a rally that has seen double-digit gains in Canadian equities, a majority of investment managers see further upside potential, and only one-in-five think the market has become overvalued. the energy, financial services, and materials sectors continue to lead in positive manager sentiment. the investment managers expressed these views in the latest quarterly Russell Investment Manager Outlook poll conducted by Russell in late April and may of 2009. Sixty-three percent of investment managers are now bullish towards broad market Canadian equities, and bullish sentiment towards Canadian small cap stocks leapt from 41 percent last quarter to 57 percent this quarter. Cash is no longer king, as only eight percent of managers say they are still bullish towards cash, and fully 61 percent are bearish. Another sign of rising confidence is the fact that 54 percent of managers now express a positive outlook for high-yield bonds, while only 21 percent remain bullish towards Canadian government bonds. Positive sentiment was up sharply for emerging market equities, with the number of bullish managers jumping from 43 percent to 67 percent. Perhaps because of the more attractive opportunities offered in Canadian and emerging markets, the outlook for u.S. and eAFe stocks dimmed slightly this quarter. At Russell, we share investment managers’ positive outlook on equities, and expect to see energy and commodity prices, as well as the Canadian dollar, continue to trend higher in the coming quarters. We continue to advocate full participation in the markets combined with a thoughtful approach to diversification in order to mitigate risks and maintain exposure to opportunities. n Russell Investments // Investment Manager Outlook / June 2009 p1
  • 3. About the Investment manager Outlook As creators of the Russell indexes and the only firm that researches more than 5,200 investment manager products, Russell Investments has extraordinary access to senior-level Canadian investment decision-makers. Prior to the end of media relations each quarter, Russell surveys a sample of those investment managers to collect contacts their top-line opinions about the direction of the markets, sectors/styles to watch, tOROntO and trends on the horizon that could impact investment strategy. the result of this survey is the Russell Investment manager Outlook. thien Huynh manager, three of the four questions posed to investment managers are repeated each Communications quarter, so that results can be measured over time. the poll also includes one 416-640-2529 topical question that changes each quarter. In addition to providing quantitative results, Russell reviews the data collected each quarter, and provides a qualitative analysis from a senior investment strategist (see page 3). the Russell Investment manager Outlook is completed and distributed at the end of each quarter. this report includes responses from investment managers with a variety of investment focuses. The manager research that Russell conducts for investment purposes is done entirely independent of the Russell Investment Manager Outlook, and responses to the survey are on a purely voluntary basis. Russell Investments // Investment Manager Outlook / June 2009 p2
  • 4. COmmentARy & AnAlySIS Investment managers see more upside in equities By Sadiq S. Adatia, CFA, Russell Investments Canada limited Despite a rally that has seen double-digit gains in Canadian equities, a majority of investment managers see further upside potential. A solid 45 percent consider Canadian equities to be undervalued and only one-in-five think the market has become overvalued. the managers continue to see the most compelling return potential in the core Canadian sectors of energy, financial services, and materials. the investment managers expressed these views in the latest quarterly Russell Investment Manager Outlook poll conducted by Russell in late April and may of 2009. Canadian equities started 2009 as one of the world’s weakest asset classes, but have roared back with a vengeance. As the tSX has set successive new highs for the year, investment managers have remained overwhelmingly bullish towards broad market Canadian equities. the number of bullish managers increased from 60 percent to 63 percent this quarter, while the number of bears increased four points to just 26 percent. In the small cap arena, the shift in sentiment has been much more dramatic. Sensing the emergence of new bargains, and given an increased appetite for risk in light of positive economic indicators, fully 57 percent of managers are now bullish towards Canadian small caps—up sharply from 41 percent last quarter. Bearishness has dropped from 38 percent of managers to 30 percent. Indeed, an increased appetite for risk is a common theme this quarter. the most notable evidence is the outlook for cash. not long ago, it was the safe haven of choice for many managers, with more than one third saying they are bullish towards the asset class, despite the fact that returns were very low, and had even dipped temporarily below zero for u.S. treasuries. today, only eight percent of managers say they are still bullish towards cash, and fully 61 percent are bearish, indicating that stocks and bonds are once again seen as offering rewards commensurate with their higher risk profile. this may be a self-fulfilling prophecy, as billions in cash currently sitting on the sidelines moves back into markets, fueling a continuation of the current rally. At Russell, we believe investors should remain fully invested at all times, because markets are always more positive than negative over time. those who choose to hold cash are, more often than not, leaving money on the table. Another sign of rising confidence is the preference for high-yield bonds over Canadian government bonds. Only 21 percent of managers remain bullish towards government issues, and 55 percent are now bearish. However, the number of Russell Investments // Investment Manager Outlook / June 2009 p3
  • 5. COmmentARy & AnAlySIS Investment managers see more upside in equities (continued) managers favouring high-yield bonds rocketed from 31 percent to 54 Manager Expectations by Asset Class percent of managers, while bears dropped from 42 percent to 34 percent. (As of June 2009) emerging market equities—which posted some of the worst performance CANADIAN EQUITIES (BROAD MARKET) 26% 63% at the nadir of the financial crisis—are another area where attitudes CANADIAN EQUITIES (SMALL CAP) towards risk appear to have changed. the number of bullish investment 30% 57% managers shot up from 43 percent to 67 percent this quarter, and bears U.S. EQUITIES slid from 40 percent to 31 percent. It is likely that many now believe the 29% 45% hard-hit markets of the developing world have become oversold. EAFE EQUITIES 35% 43% the outlook actually dimmed slightly for u.S. and eAFe stocks this EMERGING MARKET EQUITIES quarter, possibly because other regions—such as Canada and emerging 31% 67% markets—are seen as offering more attractive prospects. For eAFe, the CANADIAN BONDS number of bullish managers is unchanged at 43 percent, but bears have 55% 21% climbed from 30 percent to 35 percent. For the u.S., bulls are down a CANADIAN HIGH YIELD BONDS 34% 54% few points to 45 percent, and bears are up a few points to 29 percent. REAL ESTATE 51% 9% Returning to Canadian equities, the “big three” sectors of the domestic CASH market continue to lead in positive sentiment. Investment managers 61% 8% remain optimistic about the energy sector, with 74 percent calling $CAD VS $U.S. themselves bullish. this comes as little surprise, as oil prices have 19% 60% experienced a steady ascent in recent months, following a period of constrained supply. = % Bearish1 = % Bullish2 Seventy percent of investment managers say they are bullish towards the financial services sector, which also follows logic, as Canadian banks have note: Bearish = percent of managers stood out as the world’s strongest in recent quarters, maintaining steady responding with 1-3 on a scale of 1-7. dividends and respectable earnings throughout the financial crisis. Bullish = percent of managers responding with 5-7 on a scale of 1-7. Scores for the outlook for the materials sector also remains upbeat, with 64 neutral (4) are not included. percent of managers saying they are bullish. excluding gold, this sector See detailed charts on the following pages. was deeply depressed in recent quarters, and appears to be staging a comeback on the widely-anticipated resumption of global growth within the next few quarters. Bullish sentiment towards the consumer staples sector dropped from 46 percent to 28 percent, and at the same time, bullish sentiment towards the consumer discretionary sector rose from 39 percent to 47 percent. given the more optimistic economic climate, this could be an indication that investment managers expect pleasure, rather than simple necessity, to again become a driver of consumer behaviour. Russell Investments // Investment Manager Outlook / June 2009 p4
  • 6. COmmentARy & AnAlySIS Investment managers see more upside in equities (continued) telecommunications saw an up-tick in bullish sentiment, from 39 percent Manager Expectations by Sector of managers to 45 percent. earnings in this sector have been steady, and (As of June 2009) many market observers expect the recent change of leadership at Rogers UTILITIES Communications bodes well for future performance. 53% 25% TELECOMMUNICATIONS SERVICES the information technology sector, which is largely a proxy for Research 26% 45% in motion, saw an increase in bullishness to 59 percent, and bearishness FINANCIAL SERVICES was cut in half to just 13 percent of managers. 27% 70% INDUSTRIALS Industrial companies also saw an improvement in outlook, with bears 28% 59% remaining virtually unchanged at 28 percent, but bulls increasing 10 MATERIALS points to 59 percent of managers. the industrial sector is expected 33% 64% to benefit from improving vacation travel, government infrastructure ENERGY spending, and higher demand from emerging markets. 19% 74% CONSUMER STAPLES 28% At Russell, we share investment managers’ positive outlook on equities, 41% and expect to see energy and commodity prices, as well as the Canadian CONSUMER DISCRETIONARY 28% 47% dollar, continue to trend higher in the coming quarters. We continue to HEALTH CARE advocate full participation in the markets combined with a thoughtful 29% 48% approach to diversification in order to mitigate risks and maintain INFORMATION TECHNOLOGY exposure to opportunities. n 13% 59% = % Bearish1 = % Bullish2 note: Bearish = percent of managers responding with 1-3 on a scale of 1-7. Bullish = percent of managers responding with 5-7 on a scale of 1-7. Scores for neutral (4) are not included. See detailed charts on the following pages. Russell Investments // Investment Manager Outlook / June 2009 p5
  • 7. ReSultS valuation of the Canadian equity market Question: Which of these general valuation conditions best describes the Canadian equity market? Key Findings: • 45% of managers consider the market undervalued • 34% of managers consider the market fairly valued • 21% of the managers consider the market overvalued 100 80 % of Respondents 60 45 40 34 21 20 0 100 80 % of Respondents 60 40 20 0 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 Overvalued Overvalued Fairly valued note: numbers may not add to Fairly Valued undervalued 100 percent due to rounding. Undervalued Russell Investments // Investment Manager Outlook / June 2009 p6
  • 8. ReSultS Asset class expectations Question: What are your expectations for the performance of the following asset classes over the next 12 months? Key Findings: • Bullishness towards emerging markets up sharply to 67 percent of managers • High-yield bonds stage comeback, with majority of managers now bullish • Cash no longer king: eight percent of managers bullish, 61 percent bearish 4Q08 1Q09 Canadian Equities (Broad Market) Canadian Equities (Small Cap) 60 60 50 50 Scale is 1 to 7 40 40 34 1 = Strongly bearish 30 30 30 4 = neutral 24 22 22 22 22 22 19 18 19 20 14 16 16 14 14 20 7 = Strongly bullish 11 11 11 10 8 8 8 10 3 5 5 0 3 3 Chart data is based on 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. U.S. Equities EAFE Equities 60 60 50 50 40 40 30 26 27 27 27 30 24 26 24 22 22 20 19 18 20 16 16 16 16 14 11 11 11 10 8 8 10 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Emerging Market Equities Canadian Bonds 60 60 50 50 40 40 1Q09 2Q09 29 32 note: numbers may not add to 30 26 30 22 25 24 24 24 100 percent due to rounding. 17 19 19 20 14 17 14 17 16 16 20 11 10 6 6 5 10 3 3 3 3 3 3 0 0 0 Russell1Investments // 3Investment Manager Outlook7 / June 2009 2 4 5 6 1 2 3 4 5 6 7 p7
  • 9. 50 50 40 40 34 30 30 30 24 22 22 22 22 22 19 18 19 20 16 16 20 14 14 14 11 11 11 10 8 8 8 10 3 5 5 3 3 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 ReSultS Asset class expectations (continued) 60 U.S. Equities EAFE Equities 60 50 50 40 40 30 26 27 27 27 30 24 26 24 22 22 20 19 18 20 16 16 16 16 14 11 11 11 10 8 8 10 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Emerging Market Equities Canadian Bonds 60 60 50 50 Scale is 1 to 7 40 40 1 = Strongly bearish 32 29 30 26 25 24 24 24 30 4 = neutral 22 20 17 17 17 19 16 19 16 20 7 = Strongly bullish 14 14 11 10 6 6 5 10 3 3 0 3 3 3 3 Chart data is based on 0 0 percentage of respondents. 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Canadian High Yield Bonds Canadian Real Estate 60 60 50 50 40 40 40 31 29 30 28 29 29 30 26 22 20 19 18 17 20 14 14 11 11 12 8 9 9 9 10 6 10 3 3 3 0 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Cash $CAD vs $U.S. 60 60 50 50 40 36 40 31 31 30 25 30 22 23 22 22 20 19 19 20 17 14 16 20 14 14 14 11 9 10 6 6 10 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1Q09 2Q09 note: numbers may not add to 100 percent due to rounding. Russell Investments // Investment Manager Outlook / June 2009 p8
  • 10. ReSultS Sector expectations Question: What are your expectations for the performance of the following sectors over the next 12 months? Key Findings: • energy sector still seen as most promising with 74 percent of managers bullish • Financial services bulls rise again to 70 percent of managers • Bullish sentiment shifts from Consumer Staples to Consumer Discretionary 4Q08 1Q09 Utilities Telecommunication Services 60 60 50 50 Scale is 1 to 7 40 39 40 1 = Strongly bearish 33 33 28 29 29 30 27 30 4 = neutral 22 22 22 20 16 20 7 = Strongly bullish 12 12 13 9 9 9 10 10 6 10 3 3 3 3 0 3 0 0 3 Chart data is based on 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. Financial Services Industrials 60 60 50 50 40 40 33 30 30 30 31 30 30 27 24 25 21 20 18 18 20 13 15 16 13 9 9 9 10 10 6 6 3 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 60 Materials Energy 60 50 48 50 45 40 39 40 36 30 1Q09 2Q09 30 note: numbers may not add to 27 21 100 percent due to rounding. 20 18 18 16 20 15 15 13 10 12 10 10 9 9 9 10 6 6 6 3 3 3 0 0 0 0 0 0 Russell Investments //3 Investment Manager Outlook7 / June 2009 1 2 4 5 6 1 2 3 4 5 6 7 p9
  • 11. 50 40 39 40 33 33 28 29 29 30 27 30 22 22 22 20 16 20 12 12 13 9 9 9 10 10 6 10 3 3 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 ReSultS Sector expectations (continued) 60 Financial Services Industrials 60 50 50 40 40 33 30 30 30 31 30 30 27 24 25 21 20 18 18 20 13 15 16 13 9 9 9 10 10 6 6 3 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 60 Materials Energy 60 50 50 48 45 Scale is 1 to 7 40 39 40 36 1 = Strongly bearish 30 27 30 4 = neutral 21 20 18 18 16 20 7 = Strongly bullish 15 15 13 10 12 10 10 9 9 9 10 6 6 6 3 3 3 0 0 0 0 0 0 Chart data is based on 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. 60 Consumer Staples Consumer Discretionary 60 50 50 40 40 31 30 30 22 24 22 22 24 25 24 25 21 21 19 20 18 20 15 16 15 15 10 9 10 6 6 6 3 3 3 3 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 60 Health Care Information Technology 60 50 50 40 39 39 40 30 30 28 25 25 30 23 21 20 18 18 18 20 15 16 15 10 9 10 6 6 6 6 6 6 6 3 3 3 3 3 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1Q09 2Q09 note: numbers may not add to 100 percent due to rounding. Russell Investments // Investment Manager Outlook / June 2009 p 10
  • 12. ReSultS How long for u.S. housing recovery? Question: last quarter, ImO survey respondents indicated that an improvement in the u.S. housing market is the key economic indicator of a market recovery. How long will it take for the u.S. housing market to cease hindering a market recovery in Canada and the u.S.? a. 3 months b. 6 months c. 1 year d. 1.5 years e. 2 years f. longer Key Findings: • Investment managers divided on outlook for u.S. housing • majority expect stability within six months • nearly one third see stability taking 18 months or longer 45% 40% 39% 35% 30% % of Respondents 25% 22% 20% 19% 15% 14% 10% 6% 5% 0% 3 months 6 months 1 year 1.5 years Longer note: numbers may not add to 100 percent due to rounding. Russell Investments // Investment Manager Outlook / June 2009 p 11
  • 13. Supplementary information the Asset Classes are based on an appropriate, broad-based index applicable to that sector. For example, returns for the broad Canadian equity market are based on the S&P/tSX Composite Index. Annualized Asset Class Returns to may 2009 10.00 0.00 -10.00 -20.00 -30.00 -40.00 -50.00 Canadian equity Canadian equity US equity EAFE equity Emerging Canadian bonds Canadian high Cash (Broad Market) (Small Cap) markets equity yield bonds 1 Yr (%) 3 Yrs (%) 5 Yrs (%) 10 Yrs (%) Annualized Asset Class Returns to may 2009 Asset Classes 1 Year (%) 3 Years (%) 5 Years (%) 10 Years (%) Canadian equity (Broad market) -26.99 -1.27 6.87 6.39 S&P/TSX Composite Index5 Canadian equity (Small Cap) -35.68 -12.41 -3.29 n/A S&P/TSX Small Cap Index5 u.S. equity -25.95 -8.54 -5.75 -3.91 Russell 3000® Index6 eAFe equity -29.70 -7.48 -1.08 -0.96 MSCI EAFE Index3 emerging markets equity -27.37 3.49 10.54 7.10 MSCI Emerging Markets Index3 Canadian bonds 5.52 5.55 5.60 6.15 DEX Universe Bond Index4 Canadian high yield bonds -4.92 2.32 3.96 6.63 DEX High Yield Index4 Cash 1.57 3.17 2.97 3.32 DEX 30 Day T-Bill Index4 Index Sources: 3 mSCI , 4 PC Bond, 5 tSX group Inc., 6 Russell Investments Canada limited Russell Investments // Investment Manager Outlook / June 2009 p 12
  • 14. Asset class definitions Canadian equity (Broad Market) U.S. equity Index Source: S&P/TSX Composite Index5 Index Source: Russell 3000® Index6 Canadian equity is a growth asset u.S. equity is a growth asset involving involving the purchase of ownership the purchase of ownership interests— interests—and the rights to profits and and the rights to profits and voting that voting that this implies—in a company this implies—in companies listed on listed on the S&P/tSX Composite an American equity benchmark, such Index. equities may be purchased as the Russell 3000® Index. from the global Industry Classification Standard sectors, including financials, the Russell 3000® Index offers energy, materials, industrials, consumer investors access to the broad discretionary, consumer staples, u.S. equity universe representing health care, information technology, approximately 98% of the u.S. market. telecommunications, and utilities. the risks faced by u.S. equity include liquidity risk, market risk and company- the risks faced by Canadian equities specific risk. the value of investments include liquidity risk, market risk and is subject to changes to management, company-specific risk. the value of product distribution, investor investments is subject to changes to confidence, internal operations and the management, product distribution, company’s business environment. investor confidence, internal operations and the company’s EAFE equity business environment. Index Source: MSCI EAFE Index3 mSCI eAFe is a morgan Stanley Capital Canadian equity (Small Cap) Index Source: S&P/TSX Small Cap Index 5 International index that is designed to measure the performance of the these securities are small overseas developed stock markets of capitalization stocks which are europe, Australasia, and the Far east. represented by the S&P/tSX Small Cap International equities have historically Index. the S&P/tSX Small Cap Index produced higher long-term returns is a benchmark of smaller Canadian than lower risk investments; however companies that have been included in they tend to be relatively less liquid and the S&P/tSX Composite Index, but are more volatile than domestic equities. not members of the S&P/tSX 60 or the S&P/tSX midcap Indices. International equities entail different risks than those typically associated with domestic equities, including currency fluctuations, political and economic instability, accounting changes and foreign taxation. Russell Investments // Investment Manager Outlook / June 2009 p 13
  • 15. Asset class definitions (continued) Emerging markets equity Canadian high yield bonds Index Source: MSCI Emerging Markets Index3 Index Source: DEX High Yield Bond Index4 Index investments in emerging or Index high yield bonds are non- developing foreign markets involve investment grade debt obligations. exposure to economic structures that In general, when interest rates rise, are generally less diverse and mature, the value of bonds will decline. and to political systems which can be Bond investors should carefully expected to have less stability than consider risks such as interest rate those of more developed countries. risk, credit risk, inflation, securities As a result, emerging markets lending, repurchase and reverse securities may be less liquid and repurchase transaction risk. more volatile than domestic and Portfolios that invest primarily in more developed foreign markets. high yield bonds are subject to additional risks such as limited Canadian bonds liquidity and increased volatility. Index Source: DEX Universe Bond Index4 Cash Index Canadian bonds (Canadian Index Source: DEX 30-day T-Bill Index4 fixed income) are a defensive asset providing debt capital to Index cash is a defensive, low- organizations in return for coupon risk asset that typically involves payments and return of capital at instruments such as 90-day expiry. Canadian bonds may be sold government treasury Bills, high which finance a variety of sectors quality short term notes and including government, corporate, and commercial paper issued by major international fixed income products. financial institutions and blue the sector chosen will determine, in chip companies. Cash provides part, the bond’s level of risk. diversification and liquidity benefits to a portfolio; however cash generally the primary risks associated with provides lower investment returns Canadian bonds include interest than investments such as fixed rate risk, inflation risk and credit income or equities. While highly risk. In general, there is a negative liquid, cash generally has not kept relationship between interest rates and pace with inflation. the value of bonds. Russell Investments // Investment Manager Outlook / June 2009 p 14
  • 16. methodology and background about Russell Methodology About Russell Investments Russell Investments conducted the Russell Investment group provides Russell Investment manager Outlook strategic advice, world-class survey between may 27th and June implementation, state-of-the-art 4th, 2009. the survey was sent to performance benchmarks and a range investment managers with a variety of of institutional-quality investment investment focuses. Having a financial products. With more than C$171 billion relationship with Russell Investments in assets under management as of was not part of the criteria for being march 31st, 2009, Russell Investments included in the survey. serves individual, institutional and advisor clients around the world. In total, 27 investment management Russell Investments provides access firms and 38 investment managers to some of the world’s best money from Canada participated in the managers. It helps investors put this survey. the large majority of individual access to work in corporate defined respondents to the Russell Investment benefit and defined contribution manager Outlook have senior-level plans, and in the life savings of investment decision responsibilities, individual investors. and are often portfolio managers. Other participants included investment Founded in 1936, Russell Investments strategists, research analysts and is a subsidiary of northwestern mutual others. the manager research that and is headquartered in tacoma, Russell Investments conducts for Washington, with additional offices investment purposes is done entirely in new york, toronto, london, Paris, independent of Russell Investment Sydney, Singapore, Auckland and manager Outlook, and responses to the tokyo. Russell Investments Canada survey are on a purely voluntary basis. limited is a wholly-owned subsidiary of Frank Russell Company. For more information, please visit www.russell.com/ca. Russell Investments // Investment Manager Outlook / June 2009 p 15
  • 17. general disclosures 1 We define bearish as on balance, an this is a publication of Russell Investments organization’s or individual’s predominant Canada limited. It should not be construed view based on a belief that general market as investment advice. It is not a solicitation or conditions for the period in question will be recommendation to purchase any services of negative, and relative valuations of securities any organization. in general will trend downward. this view nothing in this publication is intended to should not be considered investment advice constitute legal, tax, securities or investment nor does it apply to any specific security. advice, nor an opinion regarding the 2 We define bullish as on balance, an appropriateness of any investment, organization’s or individual’s predominant nor a solicitation of any type. view based on a belief that overall market the contents are intended for general conditions for the period in question will be information purposes only, and you are urged positive, and relative valuations of securities to consult your own investment advisor in general will trend upward. this view should concerning your own situation and any not be considered investment advice nor does specific investment questions you may have. it apply to any specific security. For further information about these contents, 3 mSCI Index Information: mSCI makes please contact Russell Investments Canada no express or implied warranties or limited. the information contained herein has representations and shall have no liability been obtained from sources that we believe to whatsoever with respect to any mSCI data be reliable, but its accuracy and completeness contained herein. the mSCI data may not be are not guaranteed. Russell Investments further redistributed or used to create indices Canada limited reserves the right at any or financial products. this report is not time and without notice to change, amend, or approved or produced by mSCI. cease publishing the information. It has been 4 PC-Bond, a business unit of tSX Inc. prepared solely for information purposes. It Copyright © tSX Inc. All rights reserved. is made available on an “as is” basis. Russell the information contained herein may not Investments Canada limited does not make be redistributed, sold or modified or used to any warranty or representation regarding the create any derivative work without the prior information. Without prior written permission written consent of tSX Inc.” from Russell Investments Canada limited, it may not be reproduced, in whole or in 5 tSX Copyright 2009 tSX Inc. All rights reserved. part, in any form, other than for your own tHe uSeR AgReeS tHAt tSX InC. AnD tHe personal, non-commercial use. Commissions, trailing commissions, management fees and PARtIeS FROm WHOm tSX InC. OBtAInS expenses all may be associated with mutual DAtA DO nOt HAve Any lIABIlIty FOR fund investments. Please read the prospectus tHe ACCuRACy OR COmPleteneSS OF before investing. mutual funds are not tHe DAtA PROvIDeD OR FOR DelAyS, guaranteed, their values change frequently InteRRuPtIOnS OR OmISSIOnS tHeReIn and past performance may not be repeated. OR tHe ReSultS tO Be OBtAIneD multi-Asset multi-Style multi- manager®, tHROugH tHe uSe OF tHIS DAtA. Russell Investments, the Russell Investments tHe uSeR FuRtHeR AgReeS tHAt logo and the Russell 3000® Index are either neItHeR tSX InC. nOR tHe PARtIeS trademarks or registered trademarks of Frank FROm WHOm It OBtAInS DAtA mAke Russell Company and are used under license by Russell Investments Canada limited. Any RePReSentAtIOn, WARRAnty OR COnDItIOn, eItHeR eXPReSS OR ImPlIeD, Copyright © Russell Investments Canada AS tO tHe ReSultS tO Be OBtAIneD limited, 2009. All rights reserved. FROm tHe uSe OF tHe DAtA, OR AS tO tHe Date of first publication: June 2009 meRCHAntABle QuAlIty OR FItneSS OF tHe DAtA FOR A PARtICulAR PuRPOSe. 6 Russell Indices are registered trademarks of Frank Russell Company and are used under license by Russell Investments Canada limited. Russell Investments // Investment Manager Outlook / June 2009 p 16

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