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Real Estate Russell Style
Russell Real Estate Securities Fund
Interview with: Bruce Eidelson

Author: Manish Shah
Last Update: , :

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Russell goes to real estate in the typical Russell style. Instead of building a portfolio of REIT stocks, Bruce Eidelson and his team look for the best blend of real estate fund managers. The head of the Real Estate Securities Fund told Ticker how no sector is too small to benefit from Russellís trademark multi-manager approach.

Russell Real Estate Securities Fund

A: If youíve got a single manager, you will probably have more variation in that you might have more extreme positions in terms of sector weighting than you have with multiple managers. It is not likely that all three of our managers are going to make the same sector bets with the same magnitude, and so we get some natural risk management in the sense that the significant over-weights and under-weights in each sector will not be as dominant in a multi-manager framework as they would be in a single-manager framework, and that is paired with what we look at in performance results. There are other things that we monitor, too, and it may not be so much risk management but just making sure we have the most efficient portfolio Ė things such as cash positions, and other items that we want to manage at the lowest possible level so that they are not a performance drag.

Q: Maybe you can give us two or three specific examples of what you dictate to these three fund management companies and what you donít dictate?

A: We dictate the benchmark, we will specify the universe that they need to work in, and we will state to them clearly what their objective is for us, for our portfolio. We state what their expected alpha should be, and their risk, or standard deviation, relative to the benchmark. In a general sense, we aim to explain clearly what our objectives are for them in our portfolio. We will give them some general guidance, such as the investment universe they can draw from, so that we might restrict them from investing in stocks outside of the United States for example. That is really the extent of the restrictions. Our job is to very closely monitor the implementation of the strategy and how the three managers combine into a single portfolio, and that is where we track the important measures in terms of securities concentration and sector weights. We want each to implement their style for us. We donít really gain anything by limiting that ability.

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