Value Stocks Turn Cold
Russell Global Small Cap Index reflects 5.2% gain for October
November 1, 2007 — Growth stocks outperformed their value counterparts for the month of October at every U.S. market-capitalization tier. The broad-market Russell 3000® Growth Index, for example, reflected a gain of 3.5% for the month, while the Russell 3000® Value Index added only 0.1%. For the first 10 months of 2007 the growth index led the value index 16.3% to 5.3%, respectively.
"The rotation from value to growth is real," said Ann Duncan, portfolio manager. "The gap favoring growth has widened throughout 2007 and at every level of the market."
Total returns for October show the worst-performing U.S. equity benchmark for October was the Russell Microcap® Value Index (-0.31%), while the large-cap Russell 1000® Value Index (0.01%) and small-cap Russell 2000® Value Index (1.1%) reflected a positive but relatively weak return for the month.
The market rotation favoring large caps over small caps, though, wobbled in October as the Russell 2000® Index (2.9%) outperformed the Russell 1000® Index (1.7%). Despite a relatively weak return for the month, the large-cap index maintains a year-to-date advantage in 2007 of five percentage points.
Looking at the global picture, the Russell Global Small Cap Index (5.2%) also outperformed the Russell Global Large Cap Index (4%)
The Russell Emerging Markets Index reflected a gain of 10.8% for the month, adding to its 49.7% year-to-date increase through the end of October. The Russell Emerging Asia Index (10.9%) and Russell Latin America Index (12.3%) each added a double-digit return for October, and the emerging market index for Latin America surged 63.1% for the first 10 months of 2007.
Sector returns for the U.S. market show three Russell 3000 sectors lost some value for the month of October. Financial services declined the most, losing 2.1% for October and 6.5% for 2007.
"As financial services stocks struggle they're a drag on value benchmarks," said Duncan.
In the Russell 3000, 57% of the stocks increased in value for October. In the financial services sector, though, only 43% of those stocks gained ground for the month.
In the Russell 1000, two technology firms led the index for the month—SunPower (52.7%) and VMware (46.9%)—while five financial services stocks in the index lost more than 35% each for the month. Similarly, in the Russell 2000, two technology stocks led the index, Vonage Holdings (96.2%) and AuthenTec (61.1%), and eight financial services firms each lost more than 35%.
Russell 3000 Index:
Sector returns through Oct. 31 |
|
|
|
|
| |
|
October |
|
YTD 2007 |
| Technology |
|
6.2% |
|
24.4% |
| Health Care |
|
2% |
|
10.3% |
| Consumer Discretionary & Services |
|
2.9% |
|
5% |
| Consumer Staples |
|
1.1% |
|
12.5% |
| Integrated Oils |
|
-0.4% |
|
24.5% |
| Other Energy |
|
4.7% |
|
38.1% |
| Materials & Processing |
|
4.6% |
|
29.8% |
| Producer Durables |
|
-0.5% |
|
15.1% |
| Autos & Transportation |
|
2.7% |
|
9.9% |
| Financial Services |
|
-1.2% |
|
-5.7% |
| Utilities |
|
1.4% |
|
12% |
For additional performance figures on Russell's indexes and the user-friendly Russell index returns calculator, please visit: www.russell.com/Indexes.
About Russell: Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. Russell has more than $230 billion in assets under management as of Sept. 30, 2007, and serves individual, institutional and advisor clients in more than 40 countries. Russell provides access to some of the world's best money managers and helps investors put this access to work in corporate defined benefit and defined contribution plans, and in the life savings of individual investors. In addition, Russell's industry-leading indexes have $4.4 trillion in assets benchmarked to them. Founded in 1936, Russell is a subsidiary of The Northwestern Mutual Life Insurance Company. Headquartered in Tacoma, Wash., Russell has additional offices in Amsterdam, Auckland, Hong Kong, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Singapore, Sydney, Tokyo and Toronto.
Contacts:
Steve Claiborne, 253-439-1858
RC#4791
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