How Do Clients Rate Their Outsourced Trading Providers?

To be considered a best-in-class outsource trading provider, one must excel in many areas.

The Trade’s Outsourced Trading Survey for 2023 sought to discover what makes a successful provider and what trading firms are doing well. The survey asked clients what factors were important to them and how different providers performed in various categories.

Russell Investments was included in this survey, receiving extremely positive feedback from clients and highlighting key areas of outsourced trading services that might be underappreciated by the broader market.

Client services and relationship management

One category where Russell Investments saw success was in ‘Client services and relationship management’: achieving a perfect score from respondents (77 basis points above the survey average). In the survey, one client even noted Russell Investments as “the best team and partner” and “always looking after us and steering us when markets turn”.

Russell Investments’ high-touch approach to supporting clients likely contributed to the above average result. This approach spans the entire investment management process, including Russell Investments functioning as designated traders and collaborating with portfolio managers to align alpha ideas and investment strategies.

This engagement includes in-depth discussions on cash needs, market insights, and optimal trading desk strategies that provide a degree of service that might be lacking in other less consultative approaches in the outsourced trading landscape. A hands-on approach also benefits clients with less sophisticated inhouse technology that may require a more comprehensive partnership.

Business model and other factors

The unique dual registration of Russell Investments as both a broker-dealer and investment manager is another feature that sets it apart from many of its peers and potentially contributed to the perfect score received (survey average was 8.81/10) in the ‘Business model and other factors category’ of The Trade’s survey.

Russell Investments’ dual status and business model affords clients access to a more extensive set of liquidity on buy side and sell side trading venues that can contribute to improved trading performance. This includes exchanges, ATS’s, dark pools, MTF’s, and dealer counterparties that many outsourced trading firms wouldn’t be able to access.

Onboarding

‘Onboarding’ was another category Russell Investments received a perfect score in (8.36/10 was the industry average), reflecting the importance of having a dedicated team and streamlined approach to outsourced trading onboarding.

Russell Investments’ specialized team expedites the onboarding process for clients, addressing critical aspects such as account setup, credit approval, KYC compliance, and overall integration into the system. Onboarding processes can often feel overwhelming for clients, as it’s usually when they are first presented with the complexity of the outsource setup; this is why Russell Investments have prioritized having clear and regular communication to smoothen the onboarding process.

Cost vs. value for money

Cost versus value for money is a key consideration for asset managers exploring outsourcing partnerships, and here, Russell Investments excelled (62 basis points above the survey average).

Russell Investments emphasizes the value proposition beyond hard costs, considering execution quality as a crucial factor. This includes outperforming other asset managers and broker-dealers in execution, trade netting, global market access, and liquidity. The availability of Transaction Cost Analysis evidence Russell Investments' commitment to superior execution quality.

To learn more about The Trade’s Survey results, read the full report.

Disclosures

These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.

This material is not an offer, solicitation or recommendation to purchase any security.

Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.

The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity.

Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the "FTSE RUSSELL" brand.

The Russell logo is a trademark and service mark of Russell Investments.

This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty.

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