SOURCE: Russell Investments

Russell Investments

November 18, 2014 10:08 ET

Defensive Stocks Outperformed Dynamic Stocks as Global Equity Market Volatility Increased in the Fourth Quarter as of 11 November; Russell Stability Indexes™

SEATTLE, WA--(Marketwired - Nov 18, 2014) - Defensive-oriented stocks outperformed their cyclical, dynamic-oriented counterparts quarter-to-date as of 11 November, globally, as reflected by the Russell Stability Indexes.

"The Russell Defensive and Dynamic indexes' quarter-to-date performance illustrates how higher quality, more stable stocks have tended to perform in a more volatile market environment," said Tom Goodwin, senior indexes research director with Russell Investments. "In more challenging markets, investors can gain additional insight from market indexes that identify and measure company performance based on quality, i.e. balance sheet and earnings-related measures, and stability, i.e. volatility, leverage and return on assets, measures in addition to traditional market capitalization weighting measures."

To illustrate, when the Russell Global Index declined (-6.8%) between 1 October and 16 October, the Russell Global Defensive Index (-6.2%) declined less. When the Russell Global Index bounced back and returned +10.3% between 16 October and 11 November, the Russell Global Defensive Index (+10.3%) kept pace. Fourth quarter-to-date, the cumulative performance of the Russell Global Defensive Index has led that of both the Russell Global and Russell Global Dynamic Indexes.

The Russell Defensive Indexes are comprised of higher quality, lower volatility stocks than the Russell Dynamic Indexes, which are comprised of lower quality, higher volatility stocks. For this reason, the Defensive Index has historically led in down market periods while the Dynamic Index has historically led in up market periods.

    QTD performance to bottom   Performance since bottom   QTD performance
  Cumulative Performance   1 Oct 2014 - 16 Oct 2014   16 Oct 2014 - 11 Nov 2014   1 Oct 2014 - 11 Nov 2014
  Russell Global Index - Net   -6.8%   10.3%   2.8%
  Russell Global Defensive Index - Net   -6.2%   10.3%   3.5%
  Russell Global Dynamic Index - Net   -7.4%   10.3%   2.1%

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

For more information on the Russell Global Stability Indexes including a new paper which examines historical performance trends across market cycles for the Russell Defensive and Dynamic Indexes entitled Russell Stability Indexes®: A comprehensive global index series to benchmark Defensive and Dynamic managers, go to the Russell Indexes website.

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.  

Global equity involves risk associated with investments primarily in equity securities of companies located around the world, including the United States. International securities can involve risks relating to political and economic instability or regulatory conditions. Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability than those of more developed countries.

Opinions expressed by Mr. Goodwin reflect market performance as of November 11, 2014 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.

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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.