Small-Caps Regain Momentum in 2006
 January 2, 2007 — The small-cap Russell 2000® Index staged a comeback in 2006, reflecting a gain of 18.4% and outperforming the large-cap Russell 1000® Index (15.5%) for the seventh year in the past eight.
"Every time the large-cap segment picked up some momentum in performance relative to small caps in 2006, it didn't last long," said David Hintz, senior manager research analyst. "The Russell 1000 and Russell 2000 each outperformed the other for six separate months through the year, but in the end the Russell 2000 proved more resilient in their back-and-forth struggle."
The U.S. market, as reflected by Russell's comprehensive family of 26 U.S. equity indexes, showed strength across the board in 2006 as each index reflected a positive return. A slightly positive month for equity returns in December pushed the broad-market Russell 3000® Index to a year-to-date increase of 15.7% and the best-performing Russell 2000® Value Index to a sizeable 23.5% gain for the year.
Value stocks at each capitalization tier fared better than their growth counterparts by notable margins. The performance gap between the large-cap Russell 1000® Value Index and the large-cap Russell 1000® Growth Index was 13.2 percentage points, and it was 10.1 percentage points in the small-cap arena.
"Growth managers typically have larger allocations to the technology and health care sectors," said Hintz. "These two sectors, which were both underperformers in the Russell 3000 during 2006, go a long way to explain why growth managers lagged value managers in 2006."
In the Russell 2000, the technology sector (14.1%) and health care sector (9.2%) fared well in 2006, but not even half as well as consumer staples (32.2%) or materials & processing (31.2%).
Hintz added that the best performing sectors in the Russell 3000 were integrated oils (34.6%) and utilities (30.5%). "These two sectors are traditionally thought of as value sectors and their strength in 2006 helps explain why value managers beat growth managers for the year," he said.
In the Russell 2000, 56% of the stocks gained value for the month of December with a technology firm-Redback Networks (69.4%)-in the lead. Eight of the 10 worst-performing stocks for the month were in the health care sector.
In the Russell 1000, 57% of the stocks gained value in December including 33 stocks that increased more than 10% for the month. The top-performing stock for the month-Red Hat (32.2%)-is in the technology sector. It was followed by Goodyear Tire & Rubber (24.6%), Caremark RX (21%) and Station Casinos (20%).
For additional performance figures on Russell's indexes and the user-friendly Russell index returns calculator, please visit: www.russell.com/Indexes.
| RUSSELL INDEXES TOTAL RETURNS (%) |
|
|
|
|
| |
|
December |
|
2006 |
| Russell 3000® Index |
|
1.20% |
|
15.72% |
| Russell 1000® Index |
|
1.28% |
|
15.46% |
| Russell 2000® Index |
|
0.34% |
|
18.37% |
| Russell 2500™ Index |
|
0.44% |
|
16.17% |
| Russell Midcap® Index |
|
-0.01% |
|
15.26% |
| Russell Top 200® Index |
|
1.81% |
|
15.53% |
| Russell Top 50® Index |
|
2.21% |
|
18.21% |
| Russell Microcap™ Index |
|
1.61% |
|
16.54% |
| Russell 3000® Value Index |
|
2.12% |
|
22.34% |
| Russell 3000® Growth Index |
|
0.29% |
|
9.46% |
| Russell 1000® Value Index |
|
2.24% |
|
22.25% |
| Russell 1000® Growth Index |
|
0.34% |
|
9.07% |
| Russell 2000® Value Index |
|
0.87% |
|
23.48% |
| Russell 2000® Growth Index |
|
-0.24% |
|
13.35% |
| Russell 2500™ Value Index |
|
1.10% |
|
20.18% |
| Russell 2500™ Growth Index |
|
-0.23% |
|
12.26% |
| Russell Midcap® Value Index |
|
1.02% |
|
20.22% |
| Russell Midcap® Growth Index |
|
-0.90% |
|
10.66% |
| Russell Top 200® Value Index |
|
2.70% |
|
22.99% |
| Russell Top 200® Growth Index |
|
0.89% |
|
8.56% |
December 2006
SECTOR PERFORMANCE |
|
|
|
|
| |
|
Russell 2000 |
|
Russell 1000 |
| Technology |
|
14.1% |
|
10.6% |
| Health Care |
|
9.2% |
|
6.3% |
| Consumer Discretionary & Services |
|
15.1% |
|
11.9% |
| Consumer Staples |
|
32.2% |
|
16.2% |
| Integrated Oils |
|
24.2% |
|
34.7% |
| Other Energy |
|
12.8% |
|
2.7% |
| Materials & Processing |
|
31.2% |
|
18.4% |
| Producer Durables |
|
23.5% |
|
15.9% |
| Autos & Transportation |
|
13.1% |
|
12.4% |
| Financial Services |
|
19.7% |
|
19.4% |
| Utilities |
|
29% |
|
30.6% |
About Russell: Russell Investment Group, a global leader in multi-manager investing, provides investment products and services in 44 countries. Russell manages more than $181 billion in assets and advises clients worldwide representing more than $2.4 trillion. Founded in 1936, Russell 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 the industry-leading Russell indexes.
Contacts:
Steve Claiborne, 253-439-1858
Russell Investment Group, a Washington, USA corporation, operates through subsidiaries worldwide. Russell Investment Group is a subsidiary of The Northwestern Mutual Life Insurance Company.
Russell Investment Group 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.
RC#4547
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