SOURCE: Russell Investments

Russell Investments

March 14, 2014 13:00 ET

Happy Birthday Bull: Global Equity Market Rally Passes Five Year Mark, Reflecting a Bumpy but Substantial Climb for Global Indices; Russell Experts Continue to See Potential Opportunity for Disciplined Investors

SEATTLE, WA--(Marketwired - Mar 14, 2014) - Global equity markets recently passed the five year anniversary of the U.S. market low reached on March 9, 2009.

Looking back at the last five years as shown below, in the U.S. the smallest end of the capitalisation scale has exhibited the largest returns, with micro- and small-cap indices leading the way. Outside the U.S., developed European indices have outpaced emerging and frontier markets.

Dynamic-oriented indices have had the upper hand, outperforming their defensive-oriented counterparts in developed U.S. and developed European markets over the past five years. In Emerging Markets, defensive-oriented stocks have led.

The strongest index returns of the past five years featured in this IDEA have come with the greatest volatility. U.S. micro- and small-cap stock indices have exhibited the greatest standard deviation of daily returns for this time period. Emerging and frontier market indices have shown a relatively low level of volatility since March 2009 relative to developed U.S. & European market indices.

"Since the U.S. market low, reached just over five years ago, there has been a broad-based and substantial upward move in the U.S. as well as international equity markets, with developed markets of the U.S. and Europe leading the way," said Wouter Sturkenboom, Investment Strategist for Russell Investments Europe. "While performance so far in 2014 suggests the market may still have headroom, the age of the rally and high relative valuations, particularly in areas such as U.S. small cap stocks, suggest that investors should continue to do their homework and stay globally diversified in a multi asset strategy."

Index   Mar 9, 2009 - Mar 11, 2014
Total Return
  Mar 9, 2009 - Mar 11, 2014
Standard Deviation of Daily Returns (Annualised)
Russell Microcap Index   254.5%   23.8%
Russell 2000 Index   230.5%   23.7%
Russell 2000 Dynamic Index   263.1%   N/A
Russell 2000 Defensive Index   202.0%   N/A
Russell 1000 Index   184.8%   17.3%
Russell 1000 Dynamic Index   234.5%   N/A
Russell 1000 Defensive Index   147.4%   N/A
Russell Developed Europe Index   155.6%   17.3%
Russell Developed Europe Dynamic Index   166.7%   N/A
Russell Developed Europe Defensive Index   152.6%   N/A
Russell Emerging Markets Index   120.8%   15.7%
Russell Emerging Markets Dynamic Index   104.9%   N/A
Russell Emerging Markets Defensive Index   137.2%   N/A
Russell Frontier Index   75.4%   9.7%

Source: Russell Investments. Total returns, denominated in euros. Volatility for period as measured by annualized standard deviation of daily returns for each index.

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. 

There are no defensive or dynamic versions available on the Russell Frontier Index or Russell Microcap Index.

Diversification, strategic asset allocation and multi-asset investing do not assure profit or protect against loss in declining markets.

Standard deviation is applied to the daily rate of return of an index to measure the indexes' volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility in an index.

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.

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.

Opinions expressed by Mr. Sturkenboom reflect market performance as of March 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. 

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.