Russell launches frontier markets mandate

Russell Investments Canada Limited has announced it is adding a frontier markets mandate to the Russell Emerging Markets Equity Pool, which is part of the Russell Sovereign Investment Program and a new addition to the Russell LifePoints Program.

“We are excited about the addition of frontier markets to the Pool, as we believe they will help enhance returns and provide further diversification over the long term,” said David Feather, president and CEO. “Recent market events have made this region more attractive for long-term investors, and we believe the relatively unexplored frontier region has great potential.”

Frontier markets are nations with generally lesser developed economies but have significant growth potential, such as Argentina, Bangladesh, Kuwait, Nigeria, Ukraine and Vietnam. “What has made frontier markets even more compelling are the low correlations to Canadian equities and other developed and emerging markets.” said Sadiq Adatia, chief investment officer, Russell Investments Canada. “While it would be expected that frontier markets exhibit a strong positive relationship with emerging markets, surprisingly our analysis shows that has not been the case. For example, the correlation reading between frontier markets and emerging markets is a fairly low 0.40.”

The Russell Emerging Markets Equity Pool will generally have a frontier market allocation in the 8-15% range, however it may go up to a maximum of 25%.

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