SOURCE: Russell Investments

Russell Investments

April 10, 2014 16:41 ET

Value Shift: U.S. Market Changed Emphasis as Value Outperformed Growth in March and Value Has Continued to Outperform Growth Year-to-Date as of April 4, According to Russell Indexes

Russell Sees Value / Growth Dynamic Reflective of an Improving Yet Choppy Market

SEATTLE, WA--(Marketwired - Apr 10, 2014) - Value-oriented large- and small-cap U.S. stocks, after underperforming their growth-oriented counterparts in January and February, took the reins in March and value has continued to outperform growth in the U.S. year-to-date as of April 4 as measured by the Russell 1000® & Russell 2000® Growth & Value Indexes.

Within the U.S. large-cap Russell 1000® Index, the Utilities (+6.4%) sector has been the strongest performer year-to-date as of April 4. After returning +0.2% and +1.6% in January and February, respectively, Utilities led all Russell 1000 Index sectors in March with a +4.0% return. The Consumer Discretionary sector (-2.3%) has been the weakest performing sector in the Index year-to-date as of April 4, The sector has been up and down in 2014, returning (-5.5%) in January, +6.4% in February and (-2.5%) in March.

The Energy sector (+6.8%) has led the U.S. small-cap Russell 2000® Index year-to-date as of April 4. After losing (-4.2%) in January, the sector posted a (+8.1%) return in February and a (+3.3%) return in March. The Consumer Discretionary sector (-4.4%) has been the weakest performing sector in the Index year-to-date as of April 4. The sector has similarly been up and down in 2014, returning (-7.7%) in January, +5.6% in February and (-0.9%) in March.

"Improving yet choppy economic data, transitioning Fed policy and global security concerns appear to have combined to heighten market volatility this year, which has contributed to an oscillation between growth and value as reflected in the Russell Indexes," said Stephen Wood, chief markets strategist for Russell Investments. "We see the potential for positive, yet more 'normalized' higher single digit equity market returns for U.S. large-cap stocks in 2014. In this environment, stock selection will be critical for investors and skilled active managers may continue to find potential opportunities." 

"The growth and value style cycle has offered investors the opportunity to have a greater level of insight since Russell introduced the first style indexes in 1987," said Russell Indexes senior research director Tom Goodwin. "The current shift in style leadership from growth to value in both large and small cap tiers suggests that style selection may be important as a complement to stock selection."

For more information on the Russell growth and value indexes, go to the Russell Indexes website.

Index   2014 YTD a/o 4/4   Mar 2014   Feb 2014   Jan 2014
Russell 1000® Index   1.6%   0.6%   4.7%   -3.2%
Russell 1000® Value Index   3.0%   2.4%   4.3%   -3.6%
Russell 1000® Growth Index   0.3%   -1.0%   5.1%   -2.9%
Russell 2000® Index   -0.6%   -0.7%   4.7%   -2.8%
Russell 2000® Value Index   0.8%   1.2%   4.6%   -3.9%
Russell 2000® Growth Index   -1.9%   -2.5%   4.8%   -1.7%

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. Wood and Mr. Goodwin reflect market performance as of April 4, 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 is inherently uncertain and may be incorrect. 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.

Copyright © Russell Investments 2014. All rights reserved.

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.