SOURCE: Russell Investments

Russell Investments

November 08, 2013 13:56 ET

Small Caps Go Big: Record Return and Strong Asset Flows for Small Caps in 2013 Year-to-Date, According to Russell Indexes and Other Industry Sources

SEATTLE, WA--(Marketwired - Nov 8, 2013) - As of October 31, the Russell 2000® Index returned 30.9%, the strongest year-to-date return for the equivalent time period since 2003. This year-to-date return for U.S. small caps also represents a 4% premium over U.S. large-cap stocks, as reflected by a 26.1% return for the Russell 1000® Index for the same time period. In the last 15 years, the Index has exceeded a 30% annual return just one time, with a 47.3% return in 2003. 

Investor interest in the small cap market has also been quite strong, as reflected by year-to-date asset inflows into retail investment vehicles based on the Russell 2000® Index. As of October 31, approximately $12.3 billion in assets has flowed into exchange traded funds (ETFs) and mutual funds year-to-date based on the Russell 2000, Russell 2000 Growth and Russell 2000 Value Indexes. Russell 2000 Index-based ETFs YTD asset flows of approximately $10.2 billion are an all-time record for this time period.

"The objective of the Russell 2000® Index to accurately represent the U.S. small cap equity market helps make it an effective tool to measure and track this important asset class," said Ken O'Keeffe, managing director of investable indexes at Russell Investments. "For this reason, the Index gives us a variety of important measures of U.S. small caps, including risk and total returns that help investors to better understand the U.S. small cap market."

Russell 2000® Index Returns: 1998-2013

Year   Annual Return   YTD Return as of October 31*
2013   N/A   30.9%
2012   16.4%   11.8%
2011   -4.2%   -4.5%
2010   26.9%   13.6%
2009   27.2%   14.1%
2008   -33.8%   -29.0%
2007   -1.6%   6.1%
2006   18.3%   15.0%
2005   4.6%   0.2%
2004   18.4%   5.8%
2003   47.3%   39.4%
2002   -20.5%   -22.7%
2001   2.5%   -10.4%
2000   -3.0%   -0.5%
1999   21.3%   2.8%
1998   -2.6%   -12.8%

Source: Russell Investments. Returns are denominated in US dollars and are total returns, which reflect reinvestment of dividends and distributions. ETF and mutual fund flows from Morningstar Direct.

*If October 31 fell on a weekend day, the previous trading day market close was used.

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. 

Opinions expressed by Mr. O'Keeffe reflect market performance and observations as of October 31, 2013 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.