SEATTLE, WA--(Marketwired - Jan 21, 2016) - As global equity markets rode a roller coaster of volatility to start the new year, US stocks turned down sharply, reflected by an 8.2% decrease for the US large-cap Russell 1000® Index and an 11.3% decrease for the US small-cap Russell 2000® Index year-to-date as of January 15.
And, while there have been few bright spots for investors in the global equity markets year-to-date, analysis by FTSE Russell shows that indexes including stocks weighted according to higher quality and lower volatility characteristics have held up well relative to their market capitalization weighted peers amid recent market volatility as well as over the longer term.
FTSE Russell examined performance for the Russell 1000® Defensive Index and Russell 2000® Defensive Index relative to the Russell 1000® Index and Russell 2000® Index, respectively, for January to-date as well as the one, three and five year periods ended January 15. Defensive-oriented stocks have led in all time periods as represented by the Russell Stability Indexes. Furthermore, a similar and even more consistent pattern appears when viewing defensive index performance in the emerging markets equity arena, as illustrated in the chart attached.
Catherine Yoshimoto, Senior Index Product Manager, FTSE Russell:
"The Russell Stability Index Series is designed to segment market indexes based on a combination of stability factors. The more stable half of the indexes is called 'defensive' and the less stable half is called 'dynamic.' These distinguishing factors focus on relative quality and include debt to equity ratio, return on assets, earnings variability and total return volatility. And while there may be few havens for investors during this period of heightened market volatility, investors now have access to a more powerful set of indexes to help them better understand market dynamics in up as well as down markets and therefore to make more informed investment decisions."
According to a FTSE Russell 2015 survey of retail financial advisors in the United States, the top three motivating reasons for financial advisors behind using index-based products were for help in pursuing downside protection in bad markets (62%), lowering volatility (53%) and increasing alpha (49%).
More FTSE Russell Index IDEAs and other insights and analysis from FTSE Russell index experts on the benefits of index diversification can be found on the new FTSE Russell blog.
About FTSE Russell:
FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide. FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 80 countries, covering 98% of the investable market globally.
FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $10 trillion is currently benchmarked to the FTSE Russell indexes. For over 30 years, leading asset owners, asset managers, ETF providers and investment banks use FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives.
A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance, and embraces the IOSCO principles. FTSE Russell is also focused on index innovation and client collaboration as it seeks to enhance the breadth, depth and reach of its offering.
FTSE Russell is wholly owned by London Stock Exchange Group. For more information, visit www.ftserussell.com.
© 2016 London Stock Exchange Group companies.
London Stock Exchange Group companies includes FTSE International Limited ("FTSE"), Frank Russell Company ("Russell"), MTS Next Limited ("MTS"), and FTSE TMX Global Debt Capital Markets Inc ("FTSE TMX"). All rights reserved.
"FTSE®", "Russell®", "MTS®", "FTSE TMX®" and "FTSE Russell" and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under license.
Views expressed by Catherine Yoshimoto are based on information as of January 19, 2016, are subject to change and do not necessarily reflect the views of FTSE Russell or the London Stock Exchange Group.
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