By: Catherine Yoshimoto, senior index product manager
Apple Inc. is possibly the most followed stock in the US equity market, which is hardly surprising since it has the largest market capitalization in the world. For years, the scrutiny has focused on understanding what stage of the typical technology company life-cycle Apple has reached. In 2016, many market participants believed it was entering the mature stage of its business life-cycle, leaving its growth years behind. In 2017, however, Apple has proved the skeptics wrong, at least for now.
A company’s classification within the Russell Style and Stability Indexes® often gives insight into its current status. From the Russell Style Indexes perspective, the 2016 Russell US Indexes reconstitution showed Apple moving from a 100% Growth company to a blend of both Growth and Value – indicating its possible shift into the last phase of its business life-cycle. In addition, 2016 saw a swing in the company’s Stability probability as it moved from primarily Defensive to mostly Dynamic.
This year ushered in a growth revival for Apple and at the 2017 Russell US Indexes reconstitution, it returned to its 100% Growth status, as the chart below illustrates.
In addition, Apple was split evenly between the Russell Defensive and Dynamic Indexes for the first time since the infancy of the iPhone in 2008, as we can see below. Apple has exhibited some defensive characteristics in varying degrees since 2009, highlighting on one hand the stability of its company fundamentals due perhaps to its maturity and on the other hand the volatility of its stock price.
Accordingly, within the combined Russell Style and Stability Indexes, we can see that Apple is also split 50/50 between the Russell 1000® Growth-Dynamic and Russell 1000 Growth-Defensive Indexes in 2017, while no longer figuring in the Value indexes.
So the results of the 2017 Russell US Indexes reconstitution with regards to Apple are clear: as 100% Growth and 50/50 Defensive and Dynamic, they indicate that Apple is not ready to stop growing just yet. Reason enough, one might think, for market participants to continue their intense scrutiny of the world’s largest company as it continues to evolve.
© 2017 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.
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 FTSE Russell indexes 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 communication 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.
This publication may contain forward-looking statements. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statements speak only as of the date they are made and no member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking statements.