SOURCE: Russell Investments

Russell Investments

October 02, 2013 11:45 ET

U.S. Small Cap Stocks Close First Three Quarters of 2013 Up 27.7%; Have Been Positive in 4Q Three of the Last Four Times They Have Exceeded 20% in the First Three Quarters

SEATTLE, WA--(Marketwired - Oct 2, 2013) - The U.S. small-cap Russell 2000® Index returned 27.7% year-to-date as of September 30th, placing it in the top two first three quarter historical returns for the U.S. small cap index since 1995, according to Russell Indexes. This return for U.S. small cap stocks for the first three quarters of 2013 compares to a 20.8% return for the U.S. large-cap Russell 1000® Index for the same time period.  

Russell Indexes examined 4th quarter returns for the Russell 2000 Index in the four years since 1995 in which the Index exceeded a 20% return for the first three quarters. The results show that the Index continued its positive year-to-date performance in three years out of four.

  • The Index finished the first three quarters above 20% return in 1995 (25.7%), 1997 (26.6%), 2003 (28.6%) and 2009 (22.4%). 1997 was the only one of these years in which the Index turned negative in the fourth quarter, with a (-3.4%) return.

"The U.S. economy and markets have held their own in the face of fiscal austerity (fiscal cliff tax hikes, sequestration, government shutdown) and the uncertainty emanating from Fed taper policy. As slowing global growth has become more lumpy in 2013, the United States has shown strong market growth -- with volatility generating selective market opportunities for disciplined active management," said Stephen Wood, chief market strategist for Russell Investments.

Russell 2000 Index Year First-Third Quarter 4th Quarter Full Year
2013 27.7% N/A N/A
2009 22.4% 3.9% 27.2%
2003 28.6% 14.5% 47.3%
1997 26.6% -3.4% 22.3%
1995 25.7% 2.2% 28.5%

"U.S. small cap companies generate significantly less revenue outside the U.S. than do U.S. large cap companies. This close connection with U.S. economic improvement has likely been an important component of small cap stocks' outperformance year-to-date over large cap stocks, as reflected by the Russell U.S. Indexes," said David Koenig, investment strategist for Russell Indexes. "And although past performance is no guarantee of future performance, the ability of the Russell 2000 Index to accurately measure the U.S. small-cap market makes it a valuable analysis tool for investors."

Source: Russell Investments. Returns are denominated in US dollars.

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. Wood and Mr. Koenig reflect market performance and observations as of September 30, 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.