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Diverging Markets: European Stocks Have Led Other Global Equity Markets and Emerging Markets Have Significantly Underperformed Since the U.S. Fed Began Taper Talk in June 2013, According to Russell Indexes

SEATTLE, WA -- (Marketwired) -- 02/14/14 -- 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® 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® Index (12.6%), outperforming U.S. large-cap stocks, as reflected by the Russell 1000® 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

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Index                                   June 19, 2013 through Feb 12, 2014
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Russell Eurozone Index                                 18.2%
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Russell Developed Europe Index                         15.2%
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Russell 2000 Index                                     12.6%
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Russell 3000 Index                                     11.1%
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Russell 1000 Index                                     11.0%
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Russell Developed ex-U.S. Index                        11.0%
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Russell Emerging Markets Index                         1.1%
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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.

Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index.

Small capitalization (small cap) investments involve stocks of companies with smaller levels of market capitalization (generally less than $2 billion) than larger company stocks (large cap). Small cap investments are subject to considerable price fluctuations and are more volatile than large company stocks. Investors should consider the additional risks involved in small cap investments.

Global equity involves risk associated with investments primarily in equity securities of companies located around the world, including the United States. International securities can involve risks relating to political and economic instability or regulatory conditions.

Opinions expressed by Mr. Sturkenboom reflect market performance as of February 12, 2014 and are subject to change at any time based on market or other conditions without notice. Past performance does not guarantee future performance.

This material is not an offer, solicitation or recommendation to purchase any security.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional. The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.

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