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Index IDEA: Pendulum swing

As FTSE Russell begins preparations for its upcoming annual Russell US Indexes Reconstitution, FTSE Russell reviewed performance for the US large-cap Russell 1000 Index and US small-cap Russell 2000 Index since last year's Russell rebalance in various time periods. US market index returns from June 22, 2018 (the date of last year's Russell Reconstitution) through today resemble a pendulum swing, from positive to negative and back to positive, and from large-cap led to small-cap led:

Alec Young – managing director, Global Markets Research, FTSE Russell:

“The past year has seen tremendous leadership swings between large caps and small caps as investor risk appetite has ebbed and flowed. Rising interest rates and mounting trade tensions drove Q4’s steep losses across cap sizes as recession fears reigned. However, depressed valuations and sentiment readings set the stage for a broad based equity rebound as positive catalysts emerged in January. Although YTD gains have extended to both large caps and small caps, it’s no surprise the more economically sensitive Russell 2000 Index has outperformed as economic optimism has reasserted itself. Positive cyclical catalysts have included a dovish Fed policy pivot, a resilient US consumer, hopes for easing US-China trade tensions and a soft Brexit. Another factor favouring the Russell 2000 has been its lower 20% international sales footprint at a time of increased foreign economic uncertainty and dollar strength.”

For more information on the Russell US Indexes Reconstitution and US equity indexes from FTSE Russell, go to the FTSE Russell website.

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