SOURCE: Russell Investments

Russell Investments

April 19, 2013 09:09 ET

Diverging Market: South Korea Equity Market Performance Within the Russell Emerging Markets Ex-GCC Index Is Down Relative to the Index YTD as of 4/16

SEATTLE, WA--(Marketwired - Apr 19, 2013) - The Russell Emerging Markets ex-GCC Index helps indicate that political uncertainty may have taken its toll on market returns in South Korea, which has only returned (-6.1%) year-to-date within the Index. In comparison, the South Korea country constituent outperformed the Index in 2012 with an 18.1% return. The Russell Emerging Markets ex-GCC Index has returned (-2.4%) year-to-date as of April 16th after returning 17.3% in 2012.

Russell Emerging Markets ex-GCC Index country constituents the Philippines (+18.0%), Thailand (+16.3%) and Indonesia (+15.6%) have led the index in 2013, all coming off positive returns in 2012. South Africa (-10.3%), Russia (-9.2%) and Egypt (-9.0%) have been at the bottom of the Index in terms of YTD performance.

"The wide variation of performance among emerging equity markets as defined by the Russell Emerging Markets ex-GCC Index since the beginning of the year and relative to 2012 helps to illustrate the diverse nature of investment opportunities and risks across less mature equity markets. And South Korea's equity market downturn thus far this year appears to demonstrate the role that political uncertainty and fluctuations in global currencies can play in local market sentiment and investment performance," said Scott Crawshaw, emerging markets portfolio manager for Russell Investments. "And while emerging markets can present additional risks not found in developed markets, it is important to remember the important role these markets can play within a multi-asset portfolio from a diversification and return perspective. And when you are seeking exposure to emerging markets, it is important to work with an active manager with the insight to help you evaluate these opportunities and put them into a broader multi-asset context."

 
Russell Indexes Performance
 
Index / Index Country 2012 2013 YTD as of April 16th
Russell Emerging Markets ex-GCC Index 17.3% -2.4%
Brazil 3.1% -1.8%
Chile 12.0% 1.3%
China 18.4% -5.2%
Colombia 29.3% -8.1%
Egypt 45.2% -9.0%
Indonesia 5.3% 15.6%
India 23.8% -3.9%
South Korea 18.1% -6.1%
Morocco -11.8% 1.0%
Mexico 31.4% 7.4%
Malaysia 14.9% 3.7%
Philippines 44.5% 18.0%
Poland 41.8% -7.2%
Russia 11.2% -9.2%
Thailand 42.6% 16.3%
Turkey 61.3% 10.0%
Taiwan 16.6% -0.6%
South Africa 17.4% -10.3%
     

Source: Russell Investments. Returns are euro-denominated.

Russell Indexes to Reclassify Greece From Developed to Emerging Market
On March 1st, 2013, Russell Indexes announced that it will reclassify Greece within the Russell Global Indexes from a developed market country to an emerging market country, effective at the conclusion of its annual indexes reconstitution in late June. This conclusion by Russell Indexes resulted from a three-year market risk review process, as prescribed by Russell's methodology, in which Greece did not meet macro- and operational risk criteria for developed market status, but did meet classification criteria for inclusion in emerging markets.

You can find more background on the analysis which led to the reclassification of Greece to an emerging market in a paper entitled Greece: Re-emerged and a video, available on the Russell Indexes website.

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.

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. Index returns are presented in euro-denominated terms.

Russell Emerging Markets Index country constituents Hungary, the Czech Republic and Peru had less than 10 constituents or constituents with more than 30% weight in the index so were not included in the Individual breakdown.

Opinions expressed by Mr. Crawshaw reflect market performance and observations as of April 16th, 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 Global Index includes more than 10,000 securities in 48 countries and covers 98% of the investable global market. All securities in the index are classified according to size, region, country and sector. Daily Returns for the main components are available here: http://www.russell.com/indexes/data/daily_total_returns_global.asp

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. Securities may be less liquid and more volatile than US and longer-established non-US markets.

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.