The 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.
According to the announcement, 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.
The indexes are designed to serve both active and passive investment managers.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.
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