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Portfolio managers recognize that equity style decision can have a significant impact on performance. Style is defined as a system of classification by market segments that have distinguishing characteristics. The Russell’s indexes create a good benchmark for each style. These Russell US equity ETFs address the market need for rational transparent indexes leading to a transparent benchmark for the industry.

Russell pioneered style indexes in 1987 and continuously monitors its style methodology to make sure it is representative of manager practice. The most recent data shows that Russell enjoys a greater than 99% market share of products benchmarked to style indexes. Today, investors are building increasingly sophisticated products with precisely defined levels of risk versus their benchmarks. Thus, they require a high level of precision in the indexes they use, as well as the ability to provide consistency over a broad range of products. As a result:

  • 46% of all U.S. equity investment products use Russell Style Indexes as their benchmarks
  • In dollar terms, more than $1.6 trillion is benchmarked to Russell Style Indexes, with more than $800 billion benchmarked to the Russell 1000 Growth and Russell 1000 Value Indexes alone.

The data for 2009 shows that the market share of the Russell Investments family of indexes has increased, while that of its nearest competitor declined—continuing a trend that has been in place for over a decade. Russell Indexes remain the preferred benchmarks for more than 63% of U.S. institutional equity products.

Please see the table below:

Description

Symbol

1 Week

4 Weeks

13 Weeks

26 Weeks

52 Weeks

Trend Score

Russell Smallcap Growth

IWO

2.66%

5.03%

11.58%

26.1%

24.31%

13.93%

Russell Midcap Growth

IWP

2.61%

4.22%

8.82%

23.08%

22.64%

12.28%

Russell Smallcap Index

IWM

2.2%

3.61%

8.9%

21.67%

16.57%

10.59%

Russell Midcap Indedx

IWR

2.19%

3.37%

7.87%

19.76%

18.67%

10.37%

Russell Midcap Value

IWS

1.85%

2.46%

6.93%

17.96%

16.36%

9.11%

Russell Largecap Growth

IWF

2.36%

3.14%

5.7%

15.82%

16.53%

8.71%

Russell Smallcap Value

IWN

1.66%

2.0%

6.11%

18.27%

10.26%

7.66%

Russell Largecap Index

IWB

1.76%

2.4%

5.24%

15.25%

13.44%

7.62%

Russell Largecap Value

IWD

1.26%

1.68%

4.89%

15.78%

11.54%

7.03%

US small cap growth stocks are performing well – 52 week returns are showing a gain of around 24.31% followed by its growth in the mid-cap stocks which are showing a returns of 22.64%.

Small cap ETFs usually consist of companies with market capitalization of less than $ 1 billion. Small cap growth ETFs provides access to companies which have high Price/Earnings (PE) ratios and hold relatively high beta securities which tend to move up and down with the market. Owning growth stocks is undesirable when the markets are falling.

Investing in ETFs with benchmarked to Russell indexes not only increases the credibility of the portfolio but simultaneously increases the value as these benchmarks are built with solid compositions.

It is important to understand the characteristics of the ETFs in which you are investing. Russell has a particular focus as do others. It is important to validate that the investment goals of the ETF are consistent with your own goals.

Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Source: Small Cap Growth Leads Russell Table of U.S. Equity ETFs