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Small caps surge 20.7% in second quarter
Broad-market Russell 3000 sees best quarter in more than a decade
July 13, 2009 — The small-cap Russell 2000® Index reflected a surge of 20.7% for the second quarter, reversing course from three consecutive quarters of negative returns. As a result, the index showed a positive year-to-date return of 2.6% through the second quarter.
Every sector in the Russell 2000 boosted the quarterly return and all but one offered a double-digit gain. Technology (31%), consumer discretionary (30.1%), energy (28.1%) and materials & processing (27%) led the index, while utilities (8%) lagged.
"Stretching the start of the quarter back to the March 9 low point for the U.S. equity market, the rally looks even better as the Russell 2000 offered a 45.6% return for that period," said Steve Wood, Russell's chief market strategist for North America. "Such a strong run may be gratifying to long-term investors who maintained their investment objectives and discipline through the past year, but it still wasn't able to pull the one-year return (-25%) or three-year return (-9.9%) out of the red."
For the quarter, the broad-market Russell 3000® Index reflected a gain of 16.8%, marking the best quarterly return since the fourth quarter of 1998. In addition, every segment of the U.S. equity market measured by Russell Indexes added value for the month, ranging from 14% for the Russell Top 50® Index to 30% for the Russell Microcap® Growth Index.
The across-the-board positive returns for the second quarter left only some value indexes with negative year-to-date returns, including the Russell 3000® Value Index (-3.1%), but each growth index measuring the different market capitalization tiers showed a positive year-to-date return through June 30. The Russell 3000® Growth Index, for example, reflected a year-to-date gain of 11.5% through June and the Russell Midcap® Growth Index added 16.6% for the period.
Wood added that the disparity in year-to-date returns favoring growth stocks over value stocks widened in the second quarter to 14.3 percentage points in the large cap segment and 16.5% in the small cap segment.
In the large-cap Russell 1000® Index, 89% of the stocks added value for the second quarter and 52 of them gained more than 100% for the quarter, including Avis Budget Group (509%), Rite Aid (320%) and CapitalSource (301%). In addition, 175 large caps gained more than 50% for the quarter.
In the small-cap Russell 2000® Index, 73% of the stocks added value for the quarter, but nearly one-quarter of them gained more than 50% for the period and 153 of them gained more than 100%. Dollar Thrifty Auto (1,102.6%), Tenneco (550.3%) and Sonic Automotive (535%) led all others for the quarter.
| Sector returns for 2Q09 |
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Small cap:
Russell 2000 |
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Large cap:
Russell 1000 |
| Technology |
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31% |
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20.4% |
| Health Care |
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18.2% |
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9.5% |
| Consumer Discretionary |
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30.1% |
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15.8% |
| Consumer Staples |
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12.8% |
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12.5% |
| Energy |
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28.1% |
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12% |
| Materials & Processing |
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27% |
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18.3% |
| Producer Durables |
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22.3% |
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20% |
| Financial Services |
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10.2% |
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30.1% |
| Utilities |
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8% |
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8.3% |
For more returns data and real-time market analysis, 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 $136 billion in assets under management as of March 31, 2009, and serves individual, institutional and advisor clients in more than 40 countries. Russell Indexes have $4 trillion in assets benchmarked to them as of June 30, 2008. Founded in 1936, Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.
Contacts:
Steve Claiborne, 253-439-1858
Russell Investments, a Washington, USA corporation, operates through subsidiaries worldwide.
Russell Investments 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.
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.
CORP-5772
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