SOURCE: Russell Investments

Russell Investments

March 17, 2014 09:33 ET

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

SEATTLE, WA--(Marketwired - Mar 17, 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 capitalization scale has exhibited the largest returns, with micro- and small-cap indexes leading the way. Outside the U.S., developed European indexes outpaced emerging and frontier markets.

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

"We just reached the fifth anniversary of 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 Stephen Wood, Chief Market Strategist for Russell Investments. "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 (Annualized)
Russell Microcap Index  288.3%  24.9%
Russell 2000 Index  262.0%  24.8%
Russell 1000 Index  211.9%  18.1%
Russell Developed Europe Index  179.9%  22.9%
Russell Emerging Markets Index  141.8%  17.7%
Russell Frontier Index  92.1%  8.5%

Source: Russell Investments. Total returns, denominated in U.S. dollars. 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. 

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. Wood 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.