Small Caps Lose Some Luster in April
 May 2, 2006 — Despite reaching an all-time high in April, the small-cap Russell 2000® Index reflected a slight loss for the month and underperformed the large-cap Russell 1000® Index. For the year, though, the Russell 2000 (13.9%) continues to lead the Russell 1000 (5.75%) by a solid margin.
"Small cap stocks have given investors a phenomenal six years of strong returns relative to large caps," said Dennis Jensen, portfolio manager. "We'll see if the shift toward large caps in April has staying power, but for now the Russell 2000 remains the clear leader for 2006."
The relative good performance for the Russell 1000 in April was driven by value stocks as the Russell 1000® Value Index (2.5%) outperformed the Russell 1000® Growth Index (-0.14%). The large-cap value index now leads its growth counterpart year-to-date by nearly six percentage points.
"Like small caps, value stocks maintain a solid leadership position even after six years of strong returns relative to growth stocks," said Jensen.
The Russell Microcap™ Index (-0.56%) also reflected a loss in April while, on the other end of the spectrum, mega-cap stocks tended to outperform large caps. The Russell Top 200® Value Index led Russell's family of 24 U.S. indexes with a 3.2% gain.
Among the 12 sectors in Russell indexes, those considered to include economically sensitive industrial stocks have shown the most strength so far this year, while consumer-oriented and less economically sensitive sectors have struggled.
In the broad-market Russell 3000® Index, for example, materials & processing (15.4%) and producer durables (14.9%) lead all other sectors year-to-date in 2006, while health care (-1.2%), consumer staples (2.4%) and consumer discretionary (4.2%) continue to fall further behind.
"Economic news has been good in general as businesses have once again increased spending on production and infrastructure," said Jensen. "Meanwhile, rising mortgage rates have slowed refinancing, and skyrocketing gas prices have left consumers with less cash to spend on other items."
Jensen added that mergers and acquisitions have become a major force in the equity markets again. "Companies have more cash sitting around," he said. "They're looking for opportunities to spend that cash and seem particularly interested in buying other companies."
Bucking general sector performance trends, four of the 10 top-performing stocks in the Russell 2000 are in the consumer discretionary sector, including Travelzoo (96.7%), Libbey (94.1%), Steven Madden (50%), and NutriSystem (42.8%). In the Russell 1000, the two top-performing stocks for April are in the autos and transportation sector: Swift Transportation (33%) and Lear Corp. (37.8%).
By contrast, nine of the 20 worst-performing stocks are in the health care sector.
In the Russell 3000, about half of the stocks increased in value in April, including 66 stocks that gave investors a return greater than 20% for the month. Of these, 56 are in the Russell 2000 and 10 in the Russell 1000.
View daily total returns for all Russell indexes.
| RUSSELL INDEXES TOTAL RETURNS (%) |
|
|
|
|
| |
|
April |
|
YTD |
| Russell 3000® Index |
|
1.08% |
|
6.46% |
| Russell 1000® Index |
|
1.20% |
|
5.75% |
| Russell 2000® Index |
|
-0.02% |
|
13.92% |
| Russell 2500™ Index |
|
0.35% |
|
11.53% |
| Russell Midcap® Index |
|
0.70% |
|
8.37% |
| Russell Top 200® Index |
|
1.41% |
|
4.67% |
| Russell Top 50® Index |
|
1.27% |
|
3.81% |
| Russell Microcap™ Index |
|
-0.56% |
|
13.49% |
| Russell 3000® Value Index |
|
2.33% |
|
9.08% |
| Russell 3000® Growth Index |
|
-0.15% |
|
3.92% |
| Russell 1000® Value Index |
|
2.54% |
|
8.63% |
| Russell 1000® Growth Index |
|
-0.14% |
|
2.95% |
| Russell 2000® Value Index |
|
0.27% |
|
13.81% |
| Russell 2000® Growth Index |
|
-0.29% |
|
14.03% |
| Russell 2500™ Value Index |
|
0.40% |
|
10.90% |
| Russell 2500™ Growth Index |
|
0.31% |
|
12.17% |
| Russell Midcap® Value Index |
|
0.96% |
|
8.66% |
| Russell Midcap® Growth Index |
|
0.42% |
|
8.07% |
| Russell Top 200® Value Index |
|
3.23% |
|
8.61% |
| Russell Top 200® Growth Index |
|
-0.37% |
|
0.98% |
April 2006
SECTOR PERFORMANCE |
|
|
|
|
| |
|
Russell 1000 Growth |
|
Russell 1000 Value |
| Technology |
|
-1.50% |
|
-0.40% |
| Health Care |
|
-3.80% |
|
-1.10% |
| Consumer Discretionary & Services |
|
-0.50% |
|
1.90% |
| Consumer Staples |
|
0.80% |
|
2.30% |
| Integrated Oils |
|
0.70% |
|
4.70% |
| Other Energy |
|
7.80% |
|
4.90% |
| Materials & Processing |
|
1.70% |
|
4.40% |
| Producer Durables |
|
3.90% |
|
0.40% |
| Autos & Transportation |
|
-0.40% |
|
-0.70% |
| Financial Services |
|
1.30% |
|
4% |
| Utilities |
|
6.90% |
|
0.30% |
About Russell: Russell Investment Group, a global leader in multi-manager investing, provides investment products and services in more than 40 countries. Russell manages more than $167 billion in assets and advises clients worldwide representing more than $2.4 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Sydney, Singapore, Auckland and Tokyo.
Russell employs its indexes to objectively evaluate investment managers for multi-manager funds and other investment services. More than $3.8 trillion in assets are benchmarked to Russell indexes.
Russell Investment Group is a registered trade name of Frank Russell Company, a Washington, USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of The Northwestern Mutual Life Insurance Company.
Frank Russell Company is the owner of the trademarks, service marks and copyrights related to its indexes.
Russell's indexes are unmanaged and cannot be invested in directly.
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