SOURCE: Russell Investments

Russell Investments

December 13, 2013 13:49 ET

The Carney Effect? UK Small- and Mid-Cap Equities an Apparent Beneficiary of UK Economic Recovery, According to the Russell Global Indexes

SEATTLE, WA--(Marketwired - Dec 13, 2013) - Nearly six months since Mark Carney became Bank of England Governor, Russell Global Indexes reflect varied performance across cap tiers within the UK equity market.

UK equity market performance has been strong year-to-date and since 1st July relative to developed European equities as reflected by the Russell Developed Europe Index, particularly in the small- and mid-cap tiers. As of 9th December:

  • UK small cap stocks within the Russell Developed Europe Index have returned more than 29% year-to-date and nearly 20% since 1st July, outperforming the Russell Developed Europe Index for these time periods.

  • The Russell UK Mid 150 Index has returned more than 23% year-to-date and nearly 14% since 1st July, outperforming the Russell Developed Europe Index for these time periods. This recently launched index is designed to provide an accurate representation of the UK mid-cap equity market.

  • UK large cap stocks within the Russell Developed Europe Index have returned 14% year-to-date and more than 10% since 1st July 1, underperforming the Russell Developed Europe Index for these time periods.

"This year the rising tide of the British economic recovery, driven by improvements in consumer spending and the housing market, has helped contribute to a corresponding rise in the UK equity market," said Wouter Sturkenboom, investment strategist for Russell Investments Europe. "Yet we believe both these trends are somewhat temporary in nature, and will need to be sustained by wage and investment growth in 2014 for this economic and market uptrend to continue."

Index / Index Country   4Q '13 a/o Dec 9   July 1 - Dec 9, '13   '13 YTD a/o Dec 9
Russell Developed Europe Index -UK Small Caps   4.5%   19.7%   29.5%
Russell UK Mid 150 Index   2.9%   13.9%   23.2%
Russell Developed Europe Index -UK Large Caps   2.3%   10.3%   14.0%
Russell Developed Europe Index   2.8%   12.5%   18.1%

Source: Russell Investments. Returns are total returns (reflect reinvestment of dividends and distributions) and are denominated in euros.

The Russell Global Index measures the performance of the global equity market based on all investable equity securities, and is constructed to provide a comprehensive and unbiased barometer for the global segment. The index includes more than 10,000 securities in 47 countries, and covers 98% of the investable global market. All securities in the Russell Global Index are classified according to size, region, country and sector; as a result the index can be segmented into more than 300 distinct benchmarks.

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. Sturkenboom reflect market performance as of December 9, 2013 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

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

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.