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%.
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.