SOURCE: Russell Investments

Russell Investments

January 15, 2014 12:47 ET

U.S. Microcap Stocks Outperformed Small- and Large-Cap U.S. Stocks Year-to-Date as of January 10, Continuing 2013 Trend; Growth Has Led Value in Russell Microcap and Russell 2000 Indexes

SEATTLE, WA--(Marketwired - Jan 15, 2014) - The Russell Microcap® Index, which measures the performance of the smallest segment of the U.S. equity market, has outperformed the U.S. equity capitalization spectrum as represented by the U.S. small cap Russell 2000® Index and the U.S. large cap Russell 1000® Index, year-to-date as of January 10. This has continued the trend set in 2013, in which the Russell Microcap Index outperformed the Russell 2000 Index and Russell 1000 Index by nearly 7% and more than 12%, respectively.

Additionally, growth stocks have continued to lead value stocks at the smaller end of the U.S. equity market in 2014. As of January 10, growth stocks have outperformed their value counterparts in the Russell Microcap and the Russell 2000 Indexes, continuing the trend set in 2013. For the U.S. large cap Russell 1000 Index, value stocks have outperformed growth year-to-date as of January 10. In 2013, growth stocks just slightly outperformed value stocks within the Index by a 1% margin. 

"The smaller end of the U.S. market capitalization spectrum, particularly U.S. microcap stocks, have continued to outperform in 2014, building on the 2013 U.S. small cap leadership. U.S. microcaps, in particular, have gained ground the last two years after underperforming small caps in 2011," said Jon Eggins, small cap equity portfolio manager for Russell Investments. "And while we still see strong potential opportunity in the U.S. small- and microcap area, it is important for investors to keep an eye on valuations after such a strong multi-year run. Depending on your risk tolerance, U.S. small- and microcap allocation is an important part of a global multi-asset portfolio, however stock selection will be critical for investors in 2014 and active managers should continue to find potential opportunities to add value -- particularly in a less efficient area of the market." 

The Russell Microcap Index measures the performance of the microcap segment of the U.S. equity market. Microcap stocks make up less than 3% of the U.S. equity market (by market cap) and consist of the smallest 1,000 securities in the small-cap Russell 2000® Index, plus the next 1,000 smaller eligible securities by market cap. The Russell Microcap Index is intended to provide a comprehensive and unbiased barometer for the microcap segment trading on national exchanges. The Index is completely reconstituted annually to help ensure new and growing equities are reflected and companies continue to reflect appropriate capitalization and value characteristics.

For more information on small cap and microcap equities and the Russell Indexes, go to the Russell Investments website.

Index 2014 YTD a/o Jan 10 2013
Russell Microcap Index 2.1% 45.6%
Russell Microcap Growth Index 5.6% 52.8%
Russell Microcap Value Index -0.3% 41.8%
Russell 2000 Index 0.09% 38.8%
Russell 2000 Growth Index 1.0% 43.8%
Russell 2000 Value Index -0.9% 34.5%
Russell 1000 Index -0.2% 33.1%
Russell 1000 Growth Index -0.3% 33.5%
Russell 1000 Value Index -0.04% 32.5%

Source: Russell Investments. Returns are total returns (reflect reinvestment of dividends and distributions) and are denominated in US dollars.

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. Eggins reflect market performance as of January 10, 2014 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance. 

Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.

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.