As new U.S. Federal Reserve chair Janet Yellen testifies on the current state of the U.S. economy and U.S. Fed policy this week in Washington, Russell Indexes reflect a divergence in global equity markets since former Fed chair Ben Bernanke first announced the Fed tapering policy in June of last year.
From June 19, 2013, Bernanke's initial tapering announcement, through February 12, 2014, the Russell Eurozone Index returned 18.2%, followed closely by the more broadly represented Russell Developed Europe Index at 15.2%. The Russell 3000(R) Index, which represents the entire universe of U.S. stocks, returned 11.1% for this same time period, with U.S. small-cap stocks, as represented by the Russell 2000(R) Index (12.6%), outperforming U.S. large-cap stocks, as reflected by the Russell 1000(R) Index (11.0%).
Emerging markets have significantly underperformed other global equity markets during this time frame, with a 1.1% return.
"Yellen made clear in her testimony this week that she views emerging markets worries as less of a concern for the U.S. economy and, hence, as having less of an impact on potential U.S. Fed policy. This appears consistent with a growing divergence in returns across global equity markets," said Wouter Sturkenboom,investment strategist with Russell Investments Europe. "We expect 2014 to be a year of validation for global equity markets, as investors look for data to support continued global growth, and progress will surely be uneven across markets and regions. This helps support the benefits of a bottom-up, fundamental, research-driven investment approach and a globally diversified multi-asset portfolio."
For more information on the Russell Investments 2014 Annual Global Outlook, go to the Russell Investments Website.
Russell Index Returns
| Index | June 19, 2013 through Feb 12, 2014 |
| Russell Eurozone Index | 18.2% |
| Russell Developed Europe Index | 15.2% |
| Russell 2000 Index | 12.6% |
| Russell 3000 Index | 11.1% |
| Russell 1000 Index | 11.0% |
| Russell Developed ex-U.S. Index | 11.0% |
| Russell Emerging Markets Index | 1.1% |
Source: Russell Investments. Returns are total returns (reflect reinvestment of dividends and distributions) and are denominated in euros.
The Russell Global Index measures the performance of the global equity market based on all investable equity securities, and is constructed to provide a comprehensive and unbiased barometer for the global segment, The Index includes more than 10,000 securities in 47 countries, and covers 98% of the investable global market. All securities in the Russell Global Index are classified according to size, region, country and sector; as a result the index can be segmented into more than 300 distinct benchmarks.
