Russell Investments’ approach to sustainable investing has seen it take out the Responsible Investing category at the 2025 IMAP Managed Account Awards. James Harwood (Russell Investments) and Chetan Trehan (SQM Research) discuss how Russell is providing investors with exposure to strategies that seek to have positive sustainable outcomes.

A relatively recent entrant to managed accounts, Russell first launched SMAs in its core portfolios just over six years ago, before releasing its first SMAs in the sustainable space in March 2022.

Today, Russell’s managed portfolios are available on all the major platforms, although its sustainable models can only be accessed on a limited number of platforms.

According to James Harwood — Head of Multi-Asset, APAC at Russell Investments — Russell offers investors five options across the risk spectrum in its sustainable SMAs: conservative, diversified 50, balanced, growth, and high growth.

Russell’s sustainable managed portfolios aim to predominantly provide investors with exposure to investment managers and strategies that seek to have positive sustainable outcomes.

By Jayson Forrest

“The objective of all our managed accounts is to have lower carbon emissions than their respective benchmarks. We also measure ESG risk scores across the equity portfolios,” says James.

This year, Russell Investments’ approach to sustainable investing has been acknowledged by its peers, taking out the coveted Responsible Investing category at the 2025 IMAP Managed Account Awards.

Russell’s approach to constructing managed accounts in the sustainable space is consistent with how it builds SMAs across the business.

It incorporates specialist managers that seek enhanced ESG outcomes and lower carbon emissions. These active managers provide the sustainable strategies used by Russell, with these  funds forming the core of the sustainable characteristics within Russell’s managed portfolios.

Russell’s managed portfolios also draw from its complete toolkit of active, factor and passive strategies to deliver a dynamic managed portfolio at an attractive price point. In addition, all of Russell’s managed accounts have an allocation to 30 large cap Australian shares, which is something James believes advisers and their clients really like, as it provides them with exposure to franking credits. This has been a popular feature in both Russell’s sustainable and core SMAs.

“By using specialist managers, Russell is able to offer active sustainable strategies throughout our SMAs both on the growth and defensive side of our portfolio construction,” says James.

In assessing the sustainable managers Russell uses in its SMAs, it carefully considers the manager’s intent (purpose), process and outcome of their sustainable strategy. However, James acknowledges that all managers have different approaches to sustainability.

He explains: “For example, one of the managers we use is Alphinity, which uses the United Nations’ Sustainable Development Goals (SDGs) within its investment criteria process. From an ESG perspective, Alphinity uses these SDGs as a means of measuring the success of its portfolio, as well as outperforming its benchmarks.”

In the highly contested category of Responsible Investing at the 2025 IMAP Managed Account Awards, the judging panel used a 50/50 quantitative/qualitative process when assessing the entries.

According to IMAP Awards judge, Chetan Trehan — Sector Head Real Assets, Alternatives and Multi-Asset Funds at SQM Research — within the qualitative metrics, the judges looked at a range of factors including: philosophy, the ESG process, the overall investment process (comprising asset allocation, and whether TAA and/or DAA was involved), the quality/experience of the people involved, as well as client collateral and engagement.

Amongst a variety of factors, the quantitative metrics included: the Sharpe Ratio (used to measure the risk-adjusted return of an investment/portfolio, indicating how much excess return an investor receives for the extra volatility they endure), which had a relatively high weighting, as well as manager fees.

“When judging the high calibre of entries in the Responsible Investing category, the judges voted for Russell Investments,” says Chetan. “We thought Russell had a very strong team and investment process, as well as strong performance.” 

As performance was one of the key metrics the judges looked at when deciding the winner of the Responsible Investing category, James believes it’s important to note that both Russell’s balanced and growth portfolios have three-year track records, which advisers should consider when looking at the performance of sustainable SMAs.

“Many advisers get concerned about sustainability and performance. There is still a belief that you have to sacrifice returns to invest in ESG, which simply is not the case. In fact, Russell’s sustainable managed portfolios have actually delivered even stronger returns than our core portfolios over three years,” says James.

“We’re really proud of the performance of both our sustainable and core managed accounts, so to win the Responsible Investing category in the 2025 IMAP Managed Account Awards is something Russell is very proud of.”

In congratulating Russell Investments in taking out the Responsible Investing category, Toby Potter — Chair of IMAP — says managed accounts have become one of the fastest growing parts of the advice profession. This structure provides advisers and licensees with a superior way of delivering better client outcomes that more closely align with client goals.

“We are seeing continued evolution of the technology and portfolio management capability in managed accounts,” he says. “We had more entrants this year in these awards, and a wider variety of portfolios. We are demanding ever higher standards of ourselves as a profession and this is reflected in the standard of portfolio management from the asset consultants, investment teams and the advisers who connect these capabilities to each client’s own circumstances.”

Toby adds the IMAP Managed Account Awards are only possible due to the commitment of the judges who dedicated considerable time and their professional expertise in assessing the many entries in this year’s awards.

This year’s judges’ panel comprised of:

• Deanne Baker — Deputy Chief Investment Strategist at Evidentia;
• Brad Matthews — Founding Director at Brad Matthews Investment Strategies;
• Dominic McCormick — Industry Consultant;
• Nigel Douglas — Principal of Douglas Funds Consulting;
• Rob da Silva — Head of Research at Foresight Analytics;
• Chetan Trehan — Sector Head Real Assets, Alternatives and Multi-Asset Funds at SQM Research; and
• Toby Potter — Chair of IMAP and Executive Director of Philo Capital Advisers.