Value Outperforms Growth in Q1 2002

April 4, 2002 ( - Among Frank Russell Company's family of 21 US equity indexes, the small cap Russell 2000 Value Index performed best during the first three months of 2002, gaining 7.5% during March and 9.6% over the quarter.

Since hitting bottom after September’s terrorist attacks, each of Russell’s 21 indexes have rebounded:

  • the large cap Russell Top 200 Value Index is up by as much as 16.8%
  • the small cap Russell 2000 Value Index has gained 37%.

Still, eight of Russell’s indices ended the first quarter stuck in reverse with negative performance for the quarter, seven of them growth indices. Among these,

  • the Russell 2500 Growth Index, a mid- to small-cap benchmark, which lost 3%
  • the large cap Russell 1000 Growth Index, which slid 2.6%.

Cyclicals Shine

After a slew of positive economic data over the quarter, investors turned towards the cyclical sectors. For example, within the broad market Russell 3000:

  • producer durables were up 13.6%
  • autos and transportation increased by 12.7%
  • materials and processing gained 10%
  • consumer staples rose by  9.9%.

On the other hand, more growth-dominated sectors such as technology and health care, which fell by 8.2% and 1.4% respectively, dragged the overall index lower.

Style and Market Cap

Over the quarter, small caps outperformed large caps, particularly in March, continuing a trend that began in 2000. The small cap Russell 2000 gained 4%, while the large cap Russell 1000 seemed stuck in neutral at 0.7% at quarter close.

In the first quarter, value outperformed growth at every level, including large caps, mid caps and small caps. This marked a complete reversal from the fourth quarter.