.jpg)
Russell Investments, a pioneer in the notion of multi-factor style investing, yesterday announced that its Defensive and Dynamic Indexes, introduced in February 2011, will expand coverage beyond the U.S. stock universe to the 10,000 stocks tracked by Russell Indexes globally.
"Russell has expanded the scope of our Defensive and Dynamic Indexes in response to increased interest from investors in applying our new methodology to a broader set of stocks and markets and viewing the global markets in a more defensive way," said Rolf Agather, global director of research and innovation for Russell Indexes. "In a time of heightened volatility, investors still seek long-term capital appreciation, but are increasingly concerned about risk. Our insight into investment manager and capital markets behavior has enabled us to create new tools that can help all types of global investors across a range of market cycles."
Russell Indexes, a pioneer in the evolution of style investing, first introduced capitalization-weighted indexes and, later, multi-factor growth and value style indexes to the market. Russell took a further step by introducing the Defensive and Dynamic Indexes in early 2011 as a way for investors to go beyond traditional style measures to consider quality and volatility in addition to stock price measures in evaluating companies.
The Russell Global Defensive and Dynamic Indexes split the broad equity market in half based on a combination of stability factors; the more stable half of the market is called "Defensive" and the less stable half is called "Dynamic." In addition, the new indexes follow the same global-relative composition as the Russell Global Indexes. Stocks are ranked by sector and style across regions, rather than country-by-country, to better reflect how investors now approach the global markets. The result is a set of benchmarks representing the global investable universe, with the potential to reflect a more attractive return with less relative risk than the broad market across a range of investment cycles.
"The modern global markets are quite interconnected and highly volatile," said Russell Investments research director Abigail Huffman. "With market volatility at record highs, our Defensive Index returns in particular have shown that a new approach to style investing may be beneficial."
Recent research from Russell Investments has challenged traditional market theory about risk and return, showing that a smart defensive investing approach can potentially outperform other investment styles and the broad market in periods of extended volatility. In fact, according to historical return analysis, the Russell Developed ex-U.S. Large Cap Defensive Index has delivered higher returns and lower volatility over the past fifteen years and has also been largely successful this year in mitigating the impact of falling and volatile markets. And, as a complement, similar analysis has shown the Russell Global Dynamic Index to outperform the broad market during times of economic and market expansion.
The launch of the Russell Global Defensive and Dynamic Indexes is another global enhancement for Russell Indexes. In March 2011, Russell launched the Russell Global 3000™ Index Series of 18 indexes for investors seeking enhanced tradeability for investment vehicles. And earlier this month Russell Indexes announced a strategic alliance with Chi-X Europe to introduce four innovative new PanEuropean and Eurozone indexes, called the Chi-X Europe Russell Index Series, to European equity investors.
The Russell Global Defensive and Dynamic Indexes are part of the Russell Stability Index Series. To learn more about this new series of indexes and access original Russell Research on defensive equity investing and the Stability Index Series, please go to the Russell website.
