SOURCE: Russell Investments

Russell Investments

February 13, 2015 14:27 ET

U.S. Small Cap Stocks Picked Up Steam in '15 -- Russell 2000® Index & CBOE Russell 2000 Volatility Index(SM) Reflect U.S. Small Cap Stock Resurgence in New Year Relative to Large Cap Stocks

SEATTLE, WA--(Marketwired - Feb 13, 2015) - U.S. small cap stocks appear to have gained momentum thus far in 2015 relative to U.S. large cap stocks, according to Russell Indexes.        

U.S. Small Cap Performance Up Relative to Large Cap

  • From a relative performance standpoint, U.S. small cap stocks have underperformed U.S. large cap stocks in 2015 as of February 9, but to a lesser degree than in 2014. In 2014, the Russell 2000® Index returned 4.9% relative to a 13.2% return for the Russell 1000® Index. In 2015 as of February 9, the Russell 2000® Index has lost -0.7% relative to a -0.2% loss for the Russell 1000® Index. 

U.S. Small Cap Volatility Down Relative to Large Cap

  • From a relative asset class volatility standpoint, the ratio of the implied volatility for the U.S. small cap equity market, as measured by the CBOE Russell 2000 Volatility Index(SM) (RVX(SM)), to the implied volatility for the U.S. large cap equity market as measured by the CBOE Volatility Index® (VIX®), has trended lower in 2015. After peaking at  1.572 on December 2, 2014 (previous high was 1.593 on July 23, 2014), the ratio has averaged 1.18 in 2015 in the 26 trading days from January 2 through February 9.

Tom Goodwin, PhD -
Senior Research Director,  Russell Indexes
"U.S. small cap stocks have traditionally tended to reflect U.S. domestic demand more than large cap U.S. stocks, which are often multi-national. And with the U.S. jobs expansion, lower prices at the pump and less drag from a stronger U.S. dollar all working in favor of U.S. small caps, it is not surprising to see the indexes reflect decreasing volatility and improving performance for this asset class in 2015. By utilizing a blend of Russell Indexes, investors can gain greater insight into where the market has been and where it might go in the future." 

For more information on the Russell 2000® Index including the most recent Small Cap Perspectives quarterly small cap asset class report, go to the Russell Indexes website.

Source: Russell Investments & CBOE. Total returns, US dollar denominated. Year-to-date relative volatility calculations are daily closing prices of the CBOE Russell 2000 Volatility Index relative to the CBOE Volatility Index divided by number of days. CBOE and VIX are registered trademarks of the Chicago Board Options Exchange.

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 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000® Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

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 9, 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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