Investment Manager Outlook
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Investment Manager Outlook Investment Manager Outlook Document Transcript

  • Investment Manager Outlook Date: July 2008 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.
  • RuSSell InveStment mAnAgeR OutlOOk Summary of key findings key trends / June 2008 Investment manager Survey* $CAD vs. $U.S. Energy & Materials Canadian Bonds U.S. Equities MORE MORE MORE BEARISH BEARISH BEARISH MORE BULLISH *Compared to survey results from Q1 2008 Investment manager Outlook Poll. After several consecutive quarters of strong Canadian economic performance, a soaring loonie, record energy and materials prices, and seemingly modest inflation, it appears that investment managers have begun to doubt the continued upside potential of the Canadian market. In fact, the second quarter of 2008 saw a drop in bullishness towards every major economic region of the world except one — the united States. the investment managers expressed these views in the latest quarterly Russell Investment manager Outlook poll conducted by Russell in late may and June of 2008. After several quarters of weakness, bullishness towards u.S. equities climbed from 33 percent to 45 percent, and bearishness dropped 13 percent to 31 percent. As other global markets show signs of vulnerability, it appears that many investment managers are seeing attractive relative value in depressed u.S. equities. Indeed, 49 percent of investment managers say the Canadian market is now currently overvalued (another 47 percent believe it is fairly valued), and bullishness has dropped from 43 percent to 33 percent. Opinions remain divided on whether Canadian natural resources can continue their historic ascent. meanwhile, only 14 percent of managers see the loonie rising further in value. When asked what specific factors are negatively affecting equity performance, 65 percent of managers cited a slowing economy. nonetheless, they continue to strongly favour equities, over bonds. With no further rate cuts in the offing, only 18 percent say they are currently bullish on Canadian bonds. Overall, investment managers are optimistic about only a handful of asset classes—most notably, u.S. equities. n Russell Investments // Investment Manager Outlook / July 2008 p1
  • About the Investment manager Outlook As creators of the Russell indexes and the only firm that researches more than 4,500 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 / July 2008 p2
  • COmmentARy & AnAlySIS u.S. and Canadian equities are headed in opposite directions By Sadiq S. Adatia, CFA, Russell Investments Canada limited After several consecutive quarters of strong Canadian economic performance, a soaring loonie, record energy and materials prices, and seemingly modest inflation, it appears that investment managers have begun to doubt the continued upside potential of the Canadian market. In fact, the second quarter of 2008 saw a drop in bullishness towards every major economic region of the world except one—the united States. the investment managers expressed these views in the latest quarterly Russell Investment manager Outlook poll conducted by Russell in late may and June of 2008. Our most recent survey reveals a turnaround in sentiment. the u.S. market had been considered the world’s economic Achilles heel for the better part of the past year, yet in our latest survey, bullishness towards u.S. equities climbed from 33% to 45%, and bearishness dropped 13% to 31%. there appears to be a widespread realization that Canadian, european and Asian markets are not immune to the slower growth, higher energy costs, credit issues, and other challenges that were once seen as primarily the domain of the u.S. However, where these markets have not yet priced-in any significant downside, the u.S. market has already been driven to what some believe are worst-case- scenario valuations. Further, the Federal Reserve has indicated that it will tame inflation and defend the u.S. dollar with aggressive interest rate increases if necessary. the potential impact of this policy position can already be seen in a slipping Canadian dollar, and investment manager bullishness towards the loonie diving from 50% a year ago to just 14% today. looking at the whole picture, it’s likely that investment managers are simply finding better relative values in the depressed u.S. market than elsewhere in the world, and may be looking to shift profits from Canada and other markets back into American stocks. Indeed, 49% of investment managers say the Canadian market is now overvalued (another 47% believe it is fairly valued), and bullishness towards Canadian equities Russell Investments // Investment Manager Outlook / July 2008 p3
  • COmmentARy & AnAlySIS u.S. and Canadian equities are headed in opposite directions (continued) has dropped from 43% to 33%. Digging a bit deeper, bullishness Manager Expectations by Asset Class towards the materials sector—dominated by gold stocks—plummeted (As of June 2008) from 62% to just 32%. And, while 51% of managers remain bullish CANADIAN EQUITIES (BROAD MARKET) 44% 33% toward the energy sector, bears have surged from 23% to 41%. CANADIAN EQUITIES (SMALL CAP) 48% 26% In our view, this illustrates the increasing divide between those who U.S. EQUITIES believe Canadian natural resources are in the midst of a long-term secular 31% 45% growth trend driven by a fundamental shift in the global economy, and EAFE EQUITIES 36% 26% those who believe we are merely witnessing a classic bubble. EMERGING MARKET EQUITIES 50% 28% the Financial Services sector is another one with two distinct camps: CANADIAN BONDS 61% 18% the 43% of investment managers who are bullish and believe we will see CANADIAN HIGH YIELD BONDS a rebound within a reasonable timeframe, and the 43% who are bearish 44% 29% and see today’s sub-prime debt issue as a serious, long-term problem. REAL ESTATE 62% 15% After bottoming-out in the previous quarter, bullish sentiment towards CASH 15% 34% Real estate tripled this quarter, from a mere 6% of managers to $CAD VS $U.S. just over 15%. Information technology also saw bullishness rise 48% 14% considerably, from 40% to 69%, although it’s important to note that = % Bearish1 = % Bullish2 this sector is largely a proxy for RIm, which is perhaps Canada’s best- known growth stock. note: Bearish = percent of managers When asked what specific factors are negatively affecting equity responding with 1-3 on a scale of 1-7. Bullish = percent of managers responding performance, 65% of investment managers cited a slowing economy, with 5-7 on a scale of 1-7. Scores for while credit markets, low corporate earnings, inflation and energy neutral (4) are not included. See detailed charts on the following pages. costs were each cited by 25%. Interestingly, interest rate policy was cited by less than 5% of investment managers. this could be because the market dislikes uncertainty, and there is currently a high level of certainty that rates in Canada and the u.S. will be flat or nominally higher over the balance of 2008. Russell Investments // Investment Manager Outlook / July 2008 p4
  • COmmentARy & AnAlySIS u.S. and Canadian equities are headed in opposite directions (continued) Similarly, bullishness towards the Consumer Discretionary sector Manager Expectations by Sector rose from 19% to 32%, despite the conventional wisdom that says (As of June 2008) this sector will suffer during a slowdown. It’s possible that managers UTILITIES 27% 24% believe major players magna and Canadian tire have already been TELECOMMUNICATIONS SERVICES driven down to attractive valuations. 19% 41% FINANCIAL SERVICES Canada isn’t the only global market that stands to see increased capital 43% 43% outflows as the u.S. returns to favour. Bullishness towards eAFe INDUSTRIALS 31% 42% equities slipped from 34% to 26%, and bullishness towards emerging MATERIALS 32% markets fell from 36% to 28%. Again, we speculate that this is a 53% ENERGY reflection of more attractive u.S. asset prices on a relative basis. 41% 51% CONSUMER STAPLES Overall, investment managers continue to strongly favour equities over 26% 40% bonds. With no expectation of future rate cuts, bullishness towards CONSUMER DISCRETIONARY 42% 32% Canadians bonds sits at only 18%, and more than 61% of investment HEALTH CARE managers say they are now bearish. Among those managers who are 29% 31% concerned about equity performance, cash appears to be the preferred INFORMATION TECHNOLOGY 17% 70% alternative, with 34% of managers saying they’re bullish on the asset class. = % Bearish1 = % Bullish2 In sum, market sentiment deteriorated somewhat in the second quarter of 2008. A broad-based economic slowdown is the consensus view, and investment managers are optimistic about only a handful of asset note: Bearish = percent of managers responding with 1-3 on a scale of 1-7. classes—most notably, u.S. equities. n 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 / July 2008 p5
  • valuation of the Canadian equity market Question: Which of these general valuation conditions best describes the current Canadian equity market? Key Findings: • 49% of managers consider the market overvalued • 47% of managers believe the Canadian market is fairly valued 100 • 4% of managers say the market is undervalued 80 % of Respondents 60 49 47 40 20 4 0 100 80 % of Respondents 60 40 20 0 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Overvalued Overvalued Fairly valued note: numbers may not add to Fairly Valued undervalued 100 percent due to rounding. Undervalued Russell Investments // Investment Manager Outlook / July 2008 p6
  • 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 u.S. equities climbed from 33% to 45% • Bullishness towards real estate tripled • Bears dominate sentiment on Canadian dollar 1Q08 2Q08 Canadian Equities (Broad Market) Canadian Equities (Small Cap) 60 60 50 50 Scale is 1 to 7 40 40 33 1 = Strongly bearish 30 30 30 27 27 30 24 24 24 4 = neutral 22 20 22 20 16 14 16 15 20 7 = Strongly bullish 11 11 11 9 10 6 10 4 0 0 0 2 2 2 0 Chart data is based on 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. US Equities EAFE Equities 60 60 50 50 43 40 40 28 29 30 24 25 24 30 23 19 20 21 21 20 18 18 17 20 13 12 9 9 10 7 4 4 5 10 2 2 2 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 1Q08 2Q08 28 29 28 note: numbers may not add to 30 24 26 26 30 22 24 24 22 22 100 percent due to rounding. 20 16 20 15 13 15 15 11 9 9 10 5 4 5 10 0 2 2 2 0 2 0 0 Russell1Investments // 3Investment Manager Outlook7 / July 2008 2 4 5 6 1 2 3 4 5 6 7 p7
  • 50 50 40 40 33 30 30 30 27 27 30 24 24 24 22 20 22 20 16 14 16 15 20 11 11 11 9 10 6 10 2 2 2 4 0 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 ReSultS Asset classUSexpectations (continued) 60 Equities EAFE Equities 60 50 50 43 40 40 28 29 30 24 25 24 30 23 19 20 21 21 20 18 18 17 20 13 12 9 9 10 7 4 4 5 10 2 0 2 2 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 28 29 28 30 24 24 24 26 26 30 4 = neutral 22 22 22 20 16 20 7 = Strongly bullish 15 13 15 15 11 9 9 10 5 5 10 0 2 2 2 4 0 2 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 41 40 40 33 33 29 30 30 24 26 30 20 22 20 22 18 19 20 15 20 9 9 10 5 5 4 10 4 4 4 2 2 0 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Cash $CAD vs $US 60 60 50 50 43 40 39 40 40 31 30 28 30 22 18 20 20 16 16 15 15 15 20 13 11 13 10 10 7 10 5 4 4 5 4 2 0 2 2 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1Q08 2Q08 note: numbers may not add to 100 percent due to rounding. Russell Investments // Investment Manager Outlook / July 2008 p8
  • ReSultS Sector expectations Question: What are your expectations for the performance of the following sectors over the next 12 months? Key Findings: • Increase in bearishness towards energy and materials • Bulls and bears evenly split on Financials • Increase in bullishness towards Information technology 1Q08 2Q08 Utilities Telecommunication Services 60 60 50 44 49 50 Scale is 1 to 7 39 40 37 40 1 = Strongly bearish 31 30 27 27 25 30 4 = neutral 24 19 20 15 14 20 7 = Strongly bullish 10 8 10 4 5 6 6 4 10 3 3 3 Chart data is based on 0 0 0 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. 60 Financial Services Industrials 60 50 50 40 35 40 30 30 31 31 30 28 30 23 25 20 17 15 19 18 20 13 12 15 13 12 11 10 8 10 4 3 4 0 2 0 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 40 40 30 1Q08 2Q08 31 29 31 31 30 note: numbers may not add to 26 23 21 21 100 percent due to rounding. 20 18 17 16 18 20 13 13 15 15 12 10 10 8 6 8 5 10 2 2 2 3 4 0 0 0 Russell1Investments // 3Investment Manager Outlook 7/ July 2008 2 4 5 6 1 2 3 4 5 6 7 p9
  • 50 44 50 39 40 37 40 31 30 27 27 25 30 24 19 20 15 14 20 10 8 10 4 5 6 6 4 10 3 3 3 0 0 0 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 35 40 30 30 31 31 30 28 30 23 25 20 17 15 19 18 20 13 12 15 13 12 11 10 8 10 4 3 4 0 2 0 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 Scale is 1 to 7 40 40 31 31 31 1 = Strongly bearish 30 29 30 26 23 21 21 4 = neutral 20 18 17 16 18 20 7 = Strongly bullish 13 13 15 15 12 10 10 8 6 8 5 10 3 4 0 2 2 0 2 0 Chart data is based on 1 2 3 4 5 6 7 1 2 3 4 5 6 7 percentage of respondents. Consumer Staples Consumer Discretionary 60 60 50 50 40 35 40 34 31 29 30 27 26 30 23 24 23 24 24 20 15 13 20 13 12 11 10 8 8 10 5 4 3 5 2 3 0 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 42 40 37 40 33 33 30 29 28 30 20 21 20 19 17 20 17 14 14 10 6 6 6 8 10 4 3 4 0 0 2 0 0 0 0 0 0 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1Q08 2Q08 note: numbers may not add to 100 percent due to rounding. Russell Investments // Investment Manager Outlook / July 2008 p 10
  • Factors affecting Canadian equity performance Question: What factors are you most concerned could negatively affect Canadian equity market performance during the second half of 2008? (Please select your top two): Key Findings: • A slowing economy topped all picks, followed by credit markets, energy costs, inflation and low corporate earnings. • Interest rate policy in the u.S. and Canada was not ranked highly. 65% % of Respondants 28% 26% 24% 24% 15% 13% 2% 2% Slowing Credit energy low Inflation value of Other u.S. Bank of economy markets Costs Corporate Canadian Federal Canada earnings Dollar Reserve Interest Interest Rate Rate Decisions Decisions note: numbers do not add to 100 percent. managers were asked to select two factors from a list of nine. Russell Investments // Investment Manager Outlook / July 2008 p 11
  • 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 represented are based on the S&P/tSX Composite Index. Annualized Asset Class Returns to May 2008 35.00 25.00 15.00 5.00 -5.00 Canadian equity u.S. eAFe emerging Canadian Canadian high Cash (Broad market) Canadian equity equity equity markets equity bonds yield bonds -15.00 (Small Cap) -25.00 1 yr (%) 3 yrs (%) 5 yrs (%) 10 yrs (%) Annualized Asset Class Returns to may 2008 Asset Classes 1 Year (%) 3 Years (%) 5 Years (%) 10 Years (%) Canadian equity (Broad market) 7.40 18.00 18.98 8.84 Canadian equity (Small Cap) -10.11 8.05 12.11 n/A u.S. equity -13.20 -0.04 3.63 0.84 eAFe equity -9.41 7.90 11.90 3.05 emerging markets equity 13.09 23.20 25.72 11.67 Canadian bonds 6.58 4.10 5.22 6.06 Canadian high yield bonds 2.73 5.90 7.00 7.55 Cash 3.73 3.66 3.19 3.64 Index Sources: mSCI 3 , PC Bond 4, tSX group Inc.5, Russell Investments Canada limited Russell Investments // Investment Manager Outlook / July 2008 p 12
  • Asset class definitions Canadian equity (Broad Market) U.S. equity Index Source: S&P/TSX Composite Index Index Source: Russell 3000® Index Canadian equities are 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 Index mSCI eAFe is a morgan Stanley Capital Canadian equity (Small Cap) Index Source: S&P/TSX Small Cap Index 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 / July 2008 p 13
  • Asset class definitions (continued) Emerging markets equity Canadian high yield bonds Index Source: MSCI Emerging Markets Index Index Source: DEX High Yield Bond Index 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 Index Cash Index Canadian bonds (Canadian Index Source: DEX 30-day T-Bill Index 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 / July 2008 p 14
  • 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 28th and June implementation, state-of-the-art 6th, 2008. 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$218 relationship with Russell Investments billion in assets under management was not part of the criteria for being as of April 2008, Russell Investments included in the survey. serves individual, institutional and advisor clients in more than In total, 33 investment management 40 countries. Russell Investments firms and 46 investment managers provides access to some of the world’s from Canada participated in the best money managers. It helps survey. the large majority of individual investors put this access to work in respondents to the Russell Investment corporate defined benefit and defined manager Outlook have senior-level contribution plans, and in the life investment decision responsibilities, savings of 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 / July 2008 p 15
  • general disclosures 1 We define bearish as on balance, an this is a publication of Russell Investments organization’s or individual’s predominant view Canada limited. It should not be construed based on a belief that general market conditions as investment advice. It is not a solicitation or for the period in question will be negative, recommendation to purchase any services of and relative valuations of securities in general any organization unless otherwise noted. the will trend downward. this view should not be contents are intended for general information considered investment advice nor does it apply to purposes only, and you are urged to consult your any specific security. own investment advisor concerning your own 2 situation and any specific investment questions We define bullish as on balance, an organization’s you may have. For further information about these or individual’s predominant view based on a belief contents, please contact Russell Investments that overall market conditions for the period in Canada limited. the information contained herein question will be positive, and relative valuations of has been obtained from sources that we believe securities in general will trend upward. this view to be reliable, but its accuracy and completeness should not be considered investment advice nor are not guaranteed. Russell Investments Canada does it apply to any specific security. limited reserves the right at anytime and without 3 mSCI Index Information: mSCI makes no express notice to change, amend, or cease publishing or implied warranties or representations and the information. It has been prepared solely for shall have no liability whatsoever with respect to informative purposes. It is made available on an any mSCI data contained herein. the mSCI data “as is” basis. Russell Investments Canada limited may not be further redistributed or used to create does not make any warranty or representation indices or financial products. this report is not regarding the information. Without prior written approved or produced by mSCI. permission from Russell Investments Canada 4 PC-Bond, a business unit of tSX Inc. Copyright limited, it may not be reproduced, in whole or © tSX Inc. All rights reserved. the information in part, in any form, other than for your own contained herein may not be redistributed, sold personal, non-commercial use. Commissions, or modified or used to create any derivative work trailing commissions, management fees and without the prior written consent of tSX Inc.” expenses all may be associated with mutual fund investments. Please read the prospectus before tHe uSeR AgReeS tHAt tSX InC. AnD tHe investing. mutual funds are not guaranteed, their PARtIeS FROm WHOm tSX InC. OBtAInS values change frequently and past performance DAtA DO nOt HAve Any lIABIlIty FOR tHe may not be repeated. ACCuRACy OR COmPleteneSS OF tHe DAtA PROvIDeD OR FOR DelAyS, InteRRuPtIOnS OR multi-Asset multi-Style multi- manager®, and the OmmISIOnS tHeReIn OR tHe ReSultS tO Be Russell Investments logo are either trademarks or OBtAIneD tHROugH tHe uSe OF tHIS DAtA. registered trademarks of Frank Russell Company and are used under license by Russell Investments tHe uSeR FuRtHeR AgReeS tHAt neItHeR Canada limited. tSX InC. nOR tHe PARtIeS FROm WHOm It OBtAInS DAtA mAke Any RePReSentAtIOn, Copyright © Russell Investments Canada WARRAnty OR COnDItIOn, eItHeR eXPReSS limited, 2008. OR ImPlIeD, AS tO tHe ReSultS tO Be Date of publication: July 2008 OBtAIneD FROm tHe uSe OF tHe DAtA, OR AS tO tHe meRCHAntABle QuAlIty OR FItneSS OF tHe DAtA FOR A PARtICulAR PuRPOSe. 5 tSX Copyright 1997 tSX Inc. All rights reserved. Russell Investments // Investment Manager Outlook / July 2008 p 16