SOURCE: Russell Investments

Russell Investments

October 18, 2013 09:05 ET

Late to the Rally? Emerging Market Small Cap Stocks Outperformed Other Global Small Caps in October

SEATTLE, WA--(Marketwired - Oct 18, 2013) - With all eyes seemingly on the U.S. government debt ceiling negotiations, emerging market small caps, which underperformed their U.S. and European counterparts during the first three quarters of the 2013, are off to a relatively strong start in October month-to-date.

  • During the first half of October (as of October 15), the Russell Emerging Market Small Cap Index (+3.5%) outperformed both the Russell 2000 Index (+0.6%) and the Russell Developed Europe Small Cap Index (+1.3%).
  • This marks a reversal from longer term trends, as the Russell 2000 Index returned 28.4% YTD, through October 15, 2013, outperforming both the Russell Developed Europe Small-Cap Index (+27.7%) and the Russell Emerging Market Small-Cap Index (+6%) for the same time period.

"Emerging markets appear to have suffered significantly throughout the summer due to speculation surrounding the end of the Fed's bond buying program. With an improving situation in Europe and the current rally of U.S small caps, emerging markets can possibly look to benefit from the overall global economic improvement. This could be particularly true as we see a new Senate deal and potential shift to a more 'risk-on' stance by investors," said Gustavo Galindo, Emerging Market Portfolio Manager at Russell Investments. "These recent returns help underscore the role emerging markets equities can play as part of a globally diversified multi-asset portfolio."

Index MTD
(through October 15, 2013)
(through October 15, 2013)
Russell 2000 Index 0.6%   28.4%
Russell Developed Europe Small Cap Index 1.3%   27.7%
Russell Emerging Market Small Cap Index 3.5%   6.0%

Source: Russell Investments. Returns are denominated in US dollars.

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. Galindo reflect market performance and observations as of October 15, 2013 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

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.

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.