SOURCE: Russell Investments

Russell Investments

May 08, 2013 09:25 ET

Ahead of 2013 Russell Indexes Reconstitution, a Look Back Shows Dynamic Stocks Helped Drive a 24.7% Return in the Russell 2000® Index Since 2012 Reconstitution

Defensive Stocks Narrowed the Gap Between Defensive and Dynamic Stocks in the Second Quarter as the Index Reached New All-Time Highs

SEATTLE, WA--(Marketwired - May 8, 2013) - The U.S. small-cap equity market as reflected by the Russell 2000® Index returned 24.7% since the completion of the Russell Indexes 2012 annual reconstitution on June 25, 2012 through May 3, 2013, with dynamic stocks as reflected by the Russell 2000® Dynamic Index outperforming defensive stocks as reflected by the Russell 2000® Defensive Index for the same time period.

Within the Russell 2000® Index, while dynamic stocks have outpaced defensive stocks since last year's reconstitution, defensive stocks have narrowed the gap in more recent time periods, including the second quarter of 2013 through May 3 where defensive stocks just slightly underperformed dynamic, and the week of April 29-May 3, in which defensive stocks actually outperformed dynamic stocks within the Index. 

The Technology (+3.8%) and Energy (+3.7%) sectors showed the strongest returns in the week ended May 3, a week in which the Russell 2000 Index reached a new historical all-time high. Consumer sectors have led the Index for the year-to-date as of May 3, with the Consumer Discretionary (+17.4%) and Consumer Staples (+15.7%) sectors showing the strongest returns. The Consumer Discretionary sector was one of the stronger performing sectors in each period shown, even as leadership moved from dynamic to defensive stocks, highlighting the resilience of the U.S. consumer even as economic growth remains moderate.

"As we approach the closely watched annual rebalancing of the Russell Global Indexes and the U.S. equity market continues to reach new all-time highs, it is important for investors to have the most relevant and objective market proxy possible," said David Koenig, CFA, FRM, investment strategist with Russell Indexes. "The push-and-pull scenario of defensive- and dynamic-oriented stocks within the Russell 2000 Index over the last year helps illustrate the need for investors to have an index analysis tool that accurately measures and tracks the changing dynamics of the market."

Russell Index Returns

Index / Index Sector April 29th - May 3rd, 2013 2nd Qtr To Date a/o May 3rd 2013 YTD a/o May 3rd June 25th, 2012 - May 3rd, 2013
Russell 2000 Index 2.1% 0.4% 12.8% 24.7%
Russell 2000 Defensive Index 2.2% 0.3% 12.0% 23.7%
Russell 2000 Dynamic Index 2.0% 0.4% 13.6% 25.6%
Russell 2000 Consumer Discretionary sector 2.3% 4.2% 17.4% 33.6%
Russell 2000 Consumer Staples sector 0.7% 3.1% 15.7% 20.4%
Russell 2000 Energy sector 3.7% 0.0% 11.5% 28.1%
Russell 2000 Financial Services sector 1.9% 0.7% 13.8% 26.6%
Russell 2000 Healthcare sector -0.2% 0.3% 15.1% 14.5%
Russell 2000 Materials & Processing sector 2.1% -3.0% 5.2% 31.1%
Russell 2000 Producer Durables sector 2.3% -2.5% 12.0% 27.9%
Russell 2000 Technology sector 3.8% -1.1% 8.8% 16.4%
Russell 2000 Utilities sector 1.6% 4.7% 14.7% 22.1%

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. Koenig reflect market performance and observations as of May 3rd, 2013 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

The Russell 2000 Index reached a new all-time historical price level high of 954.42 as of market close on Friday, May 3rd. The previous all-time high for the Index was 953.07 on March 14th of this year.

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.