The Russell Microcap Index, which measures the 1,000 smallest companies in the US small-cap Russell 2000 Index plus 1,000 smaller US-listed stocks, has recorded an index return of 6.8% on an annualized basis in the last 15 years while generally displaying a wider variation of returns than indexes measuring larger US cap tiers.
As the US rapidly moves toward its next general presidential election, FTSE Russell examined the historical backtested performance of the Russell Microcap Index in more detail, finding that election year returns have been particularly variable for US microcaps. Specifically, general election years featuring an incumbent, notably 2004 and 2012, have been much kinder to microcaps than “open election” years featuring an entirely new slate of candidates, notably 2008 and thus far in 2016.
Catherine Yoshimoto, senior index product manager, FTSE Russell:
“Whether it is about ‘hope and change’ as then candidate Barack Obama pledged in 2008, or presumptive nominees Donald Trump pledging to ‘make America great again’ and Hillary Clinton’s ‘fighting for us’ in our current general election campaign, market indexes tend to reflect the market anxiety and uncertainty that is a natural by-product of political change. And while four presidential elections years don’t necessarily make a definitive trend, index returns indicate that market uncertainty has not been kind to the smallest listed US companies.”
Russell Microcap Index Annual Returns, 2001-2016 YTD: FTSE Russell Indexes
Source: FTSE Russell, data as at 18 May 2016. Past performance is no guarantee of future returns. Some index returns, including those prior to the index inception date, reflect hypothetical historical performance. Please see the disclaimer for important disclosures.
For more information, visit www.ftserussell.com.
© 2016 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.
FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.
All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.
Views expressed by Catherine Yoshimoto are as of May 18 and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell Microcap® Index or the fitness or suitability of the indexes for any particular purpose to which they might be put.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.
Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back- tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.