Russell Investments, a pioneer in the notion of multi-factor style investing, has announced that its Defensive and Dynamic indices, introduced in February 2011, will expand coverage beyond the US stock universe to the 10,000 stocks tracked by Russell Indexes globally, including the emerging markets.

Russell has expanded the scope of its Defensive and Dynamic indices in response to increased interest from investors in applying a new methodology to a broader set of stocks and markets, whilst viewing the global markets in a more defensive way, a statement said.

In a time of heightened volatility, investors still seek long-term capital appreciation but are increasingly concerned about risk. Russell’s insight into investment manager and capital markets behavior enables Russell to create new tools that can help all types of global investors across a range of market cycles, it said.

Russell Indexes, a pioneer in the evolution of style investing, first introduced capitalisation-weighted indices and, later, multi-factor growth and value style indices to the market.  Russell took a further step by introducing the Defensive and Dynamic indices 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 indices 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.” 

Jim Leggate, managing director Middle East, Russell Investments, commented:
“We have expanded the scope of our Defensive and Dynamic indices 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. 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 behaviour has enabled us to create new tools that can help all types of global investors across a range of market cycles.”

In addition, the new indices follow the same global-relative composition as the Russell Global indices.  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.

Leggate added: “Modern global markets are quite interconnected and highly volatile, which is why our Defensive Index returns in particular have shown that a new approach to style investing may be beneficial. Russell’s suite of investment management products and services is unrivalled – no one offers you more help when it comes to your total investment process, which are offered throughout the Middle East because the region is a key driver for business growth for Russell.”

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-US Large Cap Defensive Index has delivered higher returns and lower volatility over the past 15 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 Russell Global Defensive and Dynamic indices are part of the Russell Stability Index Series.  - TradeArabia News Service