For four decades, Russell Investments has reached individual investors through financial advisers, retirement plans and other go-betweens. But this year, the firm launched a suite of actively managed ETFs designed to be accessed directly by consumers.
"We view this as a pivotal moment for the firm," said Kate El-Hillow, Russell's president and chief investment officer, noting that the move opened new channels for growth. "It's not just about a new product line. It's a strategic shift that expands our relevance across a wider client spectrum."
The launch coincided with Russell's 40th anniversary of providing products for retail investors. The Seattle-based company, which manages assets of about $355 billion, attracted net investor inflows of $24 billion in 2024, the firm's strongest growth in more than a decade, according to El-Hillow. Revenue grew by double digits.
El-Hillow, who works out of New York City, is leading an effort to set the foundation for future growth: a firmwide initiative designed to reinvent Russell's approach to long-position only approach to active management. The effort is bringing together portfolio managers, researchers and data scientists to pore over more than 20 years of data from thousands of portfolios.
The initiative responds to the growing complexity of the markets, she said. "We're seeing increasing dispersion in active management performance, faster cycles in how macroeconomic signals are priced in and more concentration in equity leadership. These shifts challenge traditional models of active management."
The goal is to explore approaches that can generate more consistent value from active strategies. It includes analyzing the performance of external managers but also taking a closer look at stock selection and portfolio construction.
"We wanted to challenge ourselves to evolve – not by abandoning active management, but by redefining how we access alpha in today's world in a global, diversified portfolio," she said.
Among other discoveries, Russell has learned that the firm can be more systematic and objective about identifying patterns of successful managers, El-Hillow said. Some managers, for example, may enjoy average success in picking stocks but be great at holding onto winners and delivering higher payouts, she said.
"We've also identified behavioral tendencies – like premature selling of outperforming positions – that open opportunities to enhance both manager oversight and our own portfolio decision making," El-Hillow said.
Russell is incorporating the resulting insights into how it prioritizes investment ideas, rebalances exposures and evaluates managers. But the changes have been carefully applied to client portfolios, involving transparency, governance and thoughtful communication with clients, El-Hillow said. "Portfolio changes, even when evidence-based, must be deployed with care."
Russell also has been incorporating artificial intelligence in areas such as RFPs, client onboarding and commentary generation. "We're also investing in AI literacy across the organization to empower teams and democratize innovation," she said.
In the midst of the changes, the firm also had to respond to extraordinary bouts of market volatility following the Trump administration's initial tariff announcement in April. El-Hillow shared her expertise and offered advice to investors during appearances on CNBC, Bloomberg and Yahoo! Finance.
