Russell launches "stability" indexes
Innovative investment style indexes complement Growth and Value set
Seattle, WA — February 3, 2011 — Russell Investments, creator of the most widely used equity benchmarks for institutional investment products, announced today the launch of the Russell Stability Indexes offering a third dimension to its multi-factor style indexes. These new indexes are designed to represent certain stock characteristics not taken into account by existing style indexes, offering benchmark clients another means of tracking investments than traditional growth and value indexes.
Russell Investments has identified and developed a third dimension of style, keeping true to the pioneering spirit of the firm's original style methodology, which has come to define the global industry standard. The new Russell Stability Indexes are a further evolution of investment style, featuring stability-oriented quality indicators in combination with stock price volatility.
The Russell Stability Indexes are created by splitting existing Russell indexes in half based upon specific measurements of volatility and quality. The more stable half forms the "Defensive" index, while the less stable half makes up the "Dynamic" index. Dynamic companies are defined by greater exposure to certain risks, but their stock prices have tended historically to increase faster than those of Defensive companies during periods of rapidly rising stock prices. The stocks of Defensive companies historically tend to outperform stocks of Dynamic companies during weak market environments.
"We detected a need to extend the Russell Indexes' style set as clients and investors seek indexes that, while independent from other definitions of style, are still cap-weighted and encompass the overall investible market," said Rolf Agather, Director of Index Research and Innovation at Russell Investments. "The Russell Stability Indexes offer investment professionals additional style investing tools that reflect market volatility as well as current economic and credit cycles."
The Russell Stability Indexes are characterized by low turnover and high transparency, acting as the diversified building blocks of a comprehensive picture of the investible market that is currently unavailable. They are designed to serve both active and passive investment managers.
"Russell's focus on investment manager research and capital market analysis has led to a growing awareness of the importance of stability variables in explaining market behavior and investment manager returns," said Agather. "Introducing this third dimension of style effectively turns the traditional two-dimensional style box that considers market cap and growth/value designations into a three-dimensional cube that can help to better explain performance differences among equity managers, especially at critical points in the market."
Returns data on the Russell Stability Indexes, including the U.S. large-cap Russell 1000® Defensive and Russell 1000® Dynamic, the U.S. small-cap Russell 2000® Defensive and Russell 2000® Dynamic and the U.S. broad-market Russell 3000® Defensive and Russell 3000® Dynamic, is available at http://www.russell.com/indexes/data/US_Equity/Russell_stability_indexes.asp.
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. Over the course of its history, Russell's innovations have come to define many of the practices that are standard in the investment world today, and have earned the company a reputation for excellence and leadership. The firm has $155.4 billion in assets under management, as of December 31, 2010. To see how Russell helps to improve financial security for people, visit www.russell.com.
Russell launched its family of indexes in 1984 to more accurately measure U.S. market segments and better track investment manager behavior for its investment management and consulting businesses. The innovative index design includes float-adjusted market capitalization, annual reconstitution, multifactor style analysis as well as objective and transparent rules. Russell Indexes account for more than $3.9 trillion in benchmarked assets, as of December 31, 2009.
Steve Claiborne, 206-505-1858
Mike Gelormino, 212-909-4780
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