Briefly: “Russell names new CEO” and more of Thursday’s news

Russell Investments has named Andrew S. Doman as the company’s new chief executive officer, effective February 2, 2009.

Doman succeeds John Schlifske, who was named president and CEO in June 2008. Schlifske will continue in the role of president until the transition is complete, and then return to Russell’s parent company, Northwestern Mutual.

Most recently, Doman was a founding director of McKinsey & Company’s U.K.-based European asset management practice.

“We were overwhelmingly impressed by his deep knowledge of the asset management industry and the combination of his strategic, operational and managerial experience,” said Schlifske. “He is a renowned business builder and the ideal candidate to lead this great company amidst the challenges of today’s business environment, and as it embarks upon its next chapter of success.”

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Government spending may boost infrastructure returns

Around the world, governments are trying to stave off deepening economic calamity by investing in infrastructure as a form of stimulus. Often held out to be an enemy of investors, government could prove to be a saviour this time around, as the use of public-private partnerships expands.

“We estimate that in the next 20 years, global spending on infrastructure could be as high as US$20 trillion,” says Nick Langley of Australia-based RARE Infrastructure and portfolio manager of the Renaissance Global Infrastructure Fund.

Langley expects regulators and governments will allow greater returns to infrastructure investors to attract private sector capital.

Projects range from roads to bridges, rail, energy, public transit, airports and water infrastructure, all of which can provide reliable long-term returns. The fact that much of the developed world is opting to spend on infrastructure also offers an opportunity for geographic diversification within the asset class.

“Global infrastructure funds appeal to investors who want defensive investments to generate stable long-term cash flow, especially throughout retirement,” says Steve Geist, president of CIBC Asset Management. “Where there is a long-term need for investment, high returns can be sustainable and since the beginning of the decade, global infrastructure portfolios have consistently outpaced global equities indexes.”

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Leading indicator falls

The composite index of leading indicators fell 0.6% in December, with the decline led by the equity and real estate markets, according to StatsCan.

The stock market component of the index declined 7.9%, while the housing index fell 4.5%, which roughly matched declines posted in November. StatsCan pointed out that these declines were largely driven by steep losses posted earlier in the fall of 2008.

Despite weakening household balance sheets, consumer spending remained strong, particularly in the durable goods sector. Auto sales, however, fell.

Layoffs and shortened workweeks have cut into industrial production, and the outlook for exports remains bleak, with the U.S. leading indicator falling 0.6%, the steepest of 16 consecutive declines.

(01/22/09)