Buy Side Methods Cherry-Picked09.26.2011
Russell Investments expands its Investment Discipline Indexes to small cap.
Seattle-based asset manager Russell has recently made small-cap addition to its niche Investment Discipline Indexes (IDI), a niche series of indexes that are intended to capture distinct investment strategies.
Best known for its flagship Russell 3000, 2000, and 1000 series, the IDI has six large cap U.S. strategies: aggressive growth, consistent growth, growth-at-a-reasonable-price, equity income, low price to earnings, and contrarian. These large cap offerings were launched in May of this year.
Yesterday, the firm announced the series will expand to include four small cap U.S. strategies to its lineup: aggressive growth, consistent growth, low price to earnings, and contrarian.
The additions are not unlike those already assimilated in the large cap series, but investors today may be choosy about market cap due to the highly volatile nature of the markets. When markets are in freefall, many feel safe with known names.
“We believe it is prudent for investors to stay diversified and history shows that small cap can play a role in any well-balanced U.S. equity portfolio,” said Rolf Agather, managing director of index research and innovation at Russell Investments.
Despite uncertainty over whether market volatility has pushed investors into safer, large-cap names, Agather notes the firm’s strengths in small-cap investing.
“These indexes draw from Russell’s strength in researching professional money managers and our pioneering history in indexing, particularly in small cap stocks,” Agather said.
To expand the Russell Investment Discipline Indexes to the small cap arena, Russell analysts defined the four most widely practiced approaches of professional investment managers of small cap and categorized them into individual investment disciplines
“Over time, Russell analysts have identified common characteristics and preferences among investors seeking attractive investment opportunities across capitalizations. Our new small cap investment discipline indexes provide additional tools for small-cap investors to gain exposure to these strategies.”
Russell Investments, a leader in U.S. equity indexes, introduced the concept of small-cap equity indexes in 1984. Today, the Russell Indexes currently have north of 4 trillion in assets benchmarked to them.