SOURCE: Russell Investments

Russell Investments

February 24, 2015 16:36 ET

U.S. Large Cap Stocks Continued to Advance in 2015, Powered by Recent All-Time Highs for the Consumer Discretionary Sector; Russell Indexes

Valuation-Wary Investors May Consider an Equal Weight View on the Market

SEATTLE, WA--(Marketwired - Feb 24, 2015) - U.S. large cap stocks, as reflected by the Russell 1000® Index, have risen 3.1% in 2015, including a 6% return for February as of February 23.

Consumer discretionary stocks have helped power the recent U.S. large cap surge, with the Russell 1000® Consumer Discretionary Index returning 4.1% year-to-date and 7.4% February month-to-date as of February 23. And with the sector recently hitting a new all-time high on February 20*, many market watchers have expressed concerns about relative valuations.

Investors seeking an alternative way to measure the market may consider an equal weight index. Equal weight indexes seek to balance exposure to companies across indexes and sectors, helping to lessen the impact of any one stock or handful of stocks on index performance. And, while equal weight indexes might outperform or underperform their market capitalization weighted counterparts in certain periods, Russell Indexes historical returns included below illustrate that they may outperform over time.   

Tom Goodwin, PhD -
Senior Research Director,  Russell Indexes
"Equal weight indexes can provide investors with an alternative lens on market performance, particularly during times when high valuations may be a concern. Equal weight indexes break the link between a stock's price and its weight within the index, which can be particularly useful for viewing certain sectors such as Consumer Discretionary in which a few large companies such as Nike or Starbucks can dominate index performance simply because of their size. Russell's equal weight indexes spread company exposures evenly across the investment opportunity set, avoiding the over concentration that may occur in market cap weighted indexes."

Russell Market Cap Weighted Index Performance as of Feb 23rd

Index   MTD   YTD   1 Yr   3 Yrs Annualized   5 Yrs Annualized   10 Yrs Annualized
Russell 1000® Index   6.0%   3.1%   16.7%   18.3%   16.7%   8.5%
Russell 1000® Consumer Discretionary Index   7.4%   4.1%   16.4%   22.4%   21.9%   10.4%

Russell Equal Weighted Index Performance as of Feb 23rd

Index   MTD   YTD   1 Yr   3 Yrs Annualized   5 Yrs Annualized   10 Yrs Annualized
Russell 1000® Equal Weight Index   6.2%   3.9%   12.7%   17.8%   17.8%   11.7%
Russell 1000® Equal Weight Consumer Discretionary Index   7.1%   3.5%   14.8%   22.4%   22.3%   11.8%

For more information on the Russell Equal Weight Indexes  including the new Russell Equal Weight Sector Indexes, go to the Russell Indexes website.

Source: Russell Investments. Total returns, US dollar denominated.

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. 

*The Russell 1000® Consumer Discretionary Index (cap weighted) reached an all-time high of 2770.06 on February 20, 2015.

The Russell 1000® Equal Weight Index equal weights securities in the Russell 1000 Index on a quarterly basis. The index captures the risk and return performance of an equal weight investment strategy for U.S. large-cap stocks.

The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market. The Russell 1000® Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected.

Russell Investments is the owner of the trademarks, service marks and copyrights related to its respective indexes.

Opinions expressed by Mr. Goodwin reflect market performance as of February 23, 2015 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.

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Russell Investments is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of London Stock Exchange Group.