SOURCE: Russell Investments

Russell Investments

April 15, 2011 10:13 ET

Russell Stability Indexes: Defensive Outpaces Dynamic for March and Early April, Reversing Trend

SEATTLE, WA--(Marketwire - Apr 15, 2011) - Russell Investments, creator of the most widely used equity benchmarks for institutional investment products, recently launched "stability" indexes, and one-year returns through the end of the first quarter of 2011 show the Russell 3000® Dynamic Index (21.6%) outperformed the more stable Russell 3000® Defensive Index (13.4%) by eight percentage points.

However, for the month of March 2011, the Russell 3000 Defensive Index slightly outperformed the Russell 3000 Dynamic Index in the weak market environment following the natural disasters in Japan, and "defensive" stocks outpaced "dynamic" stocks by about two percentage points month-to-date through April 12.

"The stock prices of dynamic companies, which offer greater exposure to certain risks, tend to increase faster than those of defensive companies during periods of rapidly rising stock prices -- whereas the opposite tends to be the case with defensive companies," said Steve Wood, chief market strategist, Russell Investments. "Russell's dynamic and defensive indexes seem to be capturing a gyrating market that has been attempting to process the complexity of the news on the US economy and monetary policy, Europe and the Euro, commodity price spikes, and Japan and the Middle East."

The Russell Stability Indexes are created by splitting existing Russell indexes in half based upon specific measurements of volatility and quality. These new indexes are designed to represent certain stock characteristics not taken into account by existing style indexes, offering benchmark clients a more nuanced means of tracking investments than traditional growth and value indexes. The new dynamic and defensive components of the entire Russell U.S. family of indexes are a further evolution of investment style, marking the first time stability-oriented quality indicators are examined in combination with stock price volatility.

The Russell Stability Indexes are characterized by low turnover and high transparency, acting as the diversified building blocks of a comprehensive picture of the investible market that is currently unavailable. They are designed to serve both active and passive investment managers. Introducing this third dimension of style could effectively better explain performance differences among equity managers, especially at critical points in the market.

Returns data on the Russell Stability Indexes, including the U.S. large-cap Russell 1000® Defensive Index and Russell 1000® Dynamic Index, and their small-cap counterparts, is available at http://www.russell.com/indexes/data/US_Equity/Russell_US_index_returns.asp.

About Russell Investments

Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. Over the course of its history, Russell's innovations have come to define many of the practices that are standard in the investment world today, and have earned the company a reputation for excellence and leadership. The firm has approximately $161 billion in assets under management, as of March 31, 2011. To see how Russell helps to improve financial security for people, visit www.russell.com.

Russell launched its family of indexes in 1984 to more accurately measure U.S. market segments and better track investment manager behavior for its investment management and consulting businesses. The innovative index design includes float-adjusted market capitalization, annual reconstitution, multifactor style analysis as well as objective and transparent rules. Russell Indexes account for more than $3.9 trillion in benchmarked assets, as of December 31, 2009.

Russell Investments is a Washington, USA Corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.

Russell Investments is the owner of the trademarks, service marks and copyrights related to the Russell Indexes.

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.

This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty.

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 Russell 3000® Defensive Index measures the performance of the broad defensive segment of the U.S. equity universe. It includes those Russell 3000 companies with relatively stable business conditions which are less sensitive to economic cycles, credit cycles, and market volatility based on their stability variables. Stability is measured in terms of volatility (price and earnings), leverage, and return on assets. The Russell 3000 Defensive Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad defensive market. The Index is completely reconstituted annually to ensure that the represented companies continue to reflect defensive characteristics.

The Russell 3000® Dynamic Index measures the performance of the broad dynamic segment of the U.S. equity universe. It includes those Russell 3000 companies with relatively less stable business conditions which are more sensitive to economic cycles, credit cycles and market volatility based on their stability variables. Stability is measured in terms of volatility (price and earnings), leverage and return on assets. The Russell 3000 Dynamic Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad dynamic market. The Index is completely reconstituted annually to ensure that the represented companies continue to reflect dynamic characteristics.