SOURCE: Russell Investments

Russell Investments

May 02, 2013 14:20 ET

Ahead of 2013 Russell Indexes Reconstitution, a Look Back Shows Dynamic Stocks Helped Drive a 21.5% Return in the Russell 1000® Index Since 2012 Reconstitution, While Defensive Stocks and Sectors Led Year-to-Date as of April 26

SEATTLE, WA--(Marketwired - May 2, 2013) - The U.S. large-cap equity market as reflected by the Russell 1000® Index returned 21.5% since the completion of the Russell Indexes 2012 annual reconstitution on June 25, 2012 through April 26, 2013, with dynamic stocks as reflected by the Russell 1000® Dynamic Index slightly outperforming defensive stocks as reflected by the Russell 1000® Defensive Index for the same time period.

Within the Russell 1000® Index, while dynamic stocks have outpaced defensive stocks since last year's reconstitution, defensive stocks have outperformed in more recent time periods, including the first quarter of 2013, 2013 year-to-date and for the month of April as of April 26. And traditionally defensive sectors have led for the year-to-date as of April 26, with the Healthcare (+20.1%), Consumer Staples (+18.1%) and Utilities (+17.5%) sectors showing the strongest returns.

Top performing companies with the Russell 1000 Index since the completion of the 2012 Russell Indexes reconstitution (June 25th) through April 26 include consumer discretionary company NetFlix (+217.6%), utility provider Clearwire Corp. (+186.7%) and consumer staples company Green Mountain Coffee Roasters Inc. (+173.6%). The bottom three performing companies within the Index for this same time period were materials & processing company Molycorp Inc. (-74.2%), consumer discretionary company ITT Educational Services Inc. (-68.05%) and energy provider Walter Energy Inc. (-62.1%).

"At the halfway point of earnings season, the U.S. equity market's return has been strong, but in an increasingly defensive way, as shown by the Russell 1000 Index," said Stephen Wood, Chief Market Strategist at Russell Investments. "The year-to-date outperformance of the Russell 1000 Defensive Index over the Russell 1000 Dynamic Index, combined with the strong performance by traditionally defensive sectors suggests an undercurrent of this broad market rally that has run hard in 2013. As such, we remain 'guarded' -- while simultaneously 'observant' for opportunities; we think that a patient approach on the part of investors is warranted. We expect volatility and correlations, in the face of largely unchanged fundamentals, to present an environment that may favor security selection and a multi-asset approach."

Russell Index / Index Sector Returns

Index / Index Sector 2013 YTD a/o April 26th 2nd Qtr To Date a/o April 26th 1st Qtr 2013 June 25th, 2012 - April 26th, 2013
Russell 1000 Index 11.8% 0.8% 11.0% 21.5%
Russell 1000 Defensive Index 14.0% 1.9% 11.9% 20.3%
Russell 1000 Dynamic Index 9.8% -0.3% 10.1% 22.8%
Russell 1000 Consumer Discretionary sector 14.6% 2.5% 11.9% 28.4%
Russell 1000 Consumer Staples sector 18.1% 2.4% 15.2% 23.7%
Russell 1000 Energy sector 7.6% -2.6% 10.4% 21.1%
Russell 1000 Financial Services sector 13.7% 1.5% 12.0% 29.9%
Russell 1000 Healthcare sector 20.1% 3.5% 16.0% 30.2%
Russell 1000 Materials & Processing sector 3.8% -1.3% 5.1% 17.8%
Russell 1000 Producer Durables sector 10.6% -1.4% 12.2% 22.7%
Russell 1000 Technology sector 1.6% -2.1% 3.8% 2.7%
Russell 1000 Utilities sector 17.5% 5.0% 11.9% 18.2%

Russell Index Constituent Returns

Top 5 Russell 1000® Index Constituents: June 25th, 2012 - April 26th, 2013
Constituent Sector Return
NetFlix Inc. Consumer Discretionary 217.6%
Clearwire Corp. Utilities 186.7%
Green Mountain Coffee Roasters Inc. Consumer Staples 173.6%
Constellation Brands Inc. Consumer Staples 146.7%
STARZ Consumer Discretionary 135.9%
Bottom 5 Russell 1000® Index Constituents: June 25th, 2012 - April 26th, 2013
Molycorp Inc. Materials & Processing -74.2%
ITT Educational Services Consumer Discretionary -68.1%
Walter Energy Inc. Energy -62.1%
Allied Nevada Gold Corp. Materials & Processing -59.4%
Cliffs Natural Resources Inc. Materials & Processing -55.9%

Source: Russell Investments. Returns are denominated in US dollars.

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index. 

Opinions expressed by Mr. Wood reflect market performance and observations as of April 26th, 2013 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance

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

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.