SOURCE: Russell Investments

Russell Investments

April 25, 2013 10:44 ET

Low Volatility: Russell 1000® & Russell 2000® Low Volatility Indexes Delivered Lower Variability & Stronger Returns Relative to Parent Indexes

SEATTLE, WA--(Marketwired - Apr 25, 2013) - The Russell Low Volatility Indexes, U.S. large- and small-cap indexes that seek to deliver lower volatility of returns than their parent Russell 1000® and Russell 2000® Indexes, have delivered on their objective in various time periods over the past year. 

The Russell 1000® & Russell 2000® Low Volatility Indexes aim to offer lower volatility as well as a competitive return to their parent index via an objective, transparent construction approach designed to deliver focused exposure to stocks with low total return variability. Lower volatility stocks are given more weight within the index.

  • The Russell 1000® Low Volatility Index had a stronger relative return with lower relative standard deviation than the Russell 1000® Index for the quarter-to-date, year-to-date and one year as of 4/22, as well as for the first quarter.
  • The Russell 2000® Low Volatility Index had a stronger relative return with lower relative standard deviation than the Russell 2000® Index for the quarter-to-date, year-to-date and one year as of 4/22.

"Concern about market volatility in recent years has spurred interest in indexes that focus on stocks exhibiting lower historical variability of returns than their parent indexes," said David Koenig, CFA, FRM, investment strategist with Russell Indexes. "In today's environment of heightened uncertainty, investors have utilized low volatility strategies in portfolio construction as a way to help manage portfolio volatility while maintaining equity market participation."

Russell Index Returns
Index   2nd Qtr. To Date as of 4/22   1st Quarter 2013   2013 YTD as of 4/22   One Year as of 4/22
Russell 1000® Index   (-0.5%)   11.0%   10.4%   16.1%
Russell 1000®  Low Volatility Index   0.9%   13.4%   14.5%   20.4%
Russell 2000®  Index   (-3.8%)   12.4%   8.1%   15.5%
Russell 2000® Low Volatility Index   (-2.3%)   12.0%   9.5%   17.3%
Russell Index Standard Deviations
Index   2nd Qtr. To Date as of 4/22   1st Quarter 2013   2013 YTD as of 4/22   One Year as of 4/22
Russell 1000® Index   15.9%   10.1%   11.6%   12.9%
Russell 1000®  Low Volatility Index   14.3%   9.3%   10.5%   11.0%
Russell 2000®  Index   22.6%   12.0%   15.2%   16.4%
Russell 2000® Low Volatility Index   19.1%   11.2%   13.3%   13.8%

Source: Russell Investments. Returns are denominated in US dollars. Standard deviation for all time periods is based on annualized standard deviation of daily index returns.

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. Koenig reflect market performance and observations as of April 22nd, 2013 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.

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.