Russell Indexes Rank #1 in Institutional Usage; Benchmark Survey Finds a $500 Billion Increase This Year Alone
The survey also found about half (49.5%) of the $3.8 trillion in assets represented in the survey now are benchmarked to Russell indexes and, in terms of institutional usage, Russell indexes represent nine of the top 10. The small-cap Russell 2000(R) Index continues to rank as the second most commonly used equity benchmark in the U.S. institutional market.
“Since Russell indexes are a direct outgrowth of our need for better tools to evaluate investment managers for our multi-manager investment business, they were specifically created as broadly representative and unbiased performance benchmarks. More investors seem to agree that this methodology leads to the most relevant indexes available.”
These rankings were determined by a Russell research team's examination of 2,954 U.S. equity products listed in Nelson Information's Marketplace Web database. A report on the survey is posted on www.russell.com.
"Professional investors know the importance of using the right tools when measuring relative performance of investment funds," said Lori Richards, senior product manager for Russell indexes. "Since Russell indexes are a direct outgrowth of our need for better tools to evaluate investment managers for our multi-manager investment business, they were specifically created as broadly representative and unbiased performance benchmarks. More investors seem to agree that this methodology leads to the most relevant indexes available."
Russell's family of indexes was the only major set of benchmarks to gain market share based on product usage this year, continuing a trend identified by Nelson in its original survey of benchmark usage in 1998. Russell's market share has increased from 18.5% in 1996, 27.9% in 1998 and 39.3% in 2002.
"Russell created its indexes to be used as benchmarks by institutional investors," said Kelly Haughton, strategic director for Russell indexes. "We are heartened to see that Russell indexes are the benchmarks of choice among investment managers of institutional U.S. equity funds."
The strongest shift among Russell indexes was the surge in use of Russell's growth and value style indexes. The Russell 1000(R) Value Index, for example, now is the benchmark of choice for 243 investment products, increasing from 25 in 1996 and 219 last year at this time.
Individually, the top 10 U.S. equity benchmarks ranked by usage are the Standard & Poors 500 Index, Russell 2000(R) Index, Russell 1000(R) Value Index, Russell 1000(R) Growth Index, Russell 2000(R) Growth Index, Russell 2000(R) Value Index, Russell Midcap(R) Growth Index, Russell 2500(TM) Index, Russell Midcap(R) Value Index, and Russell 3000(R) Index.
Russell originally developed and still uses its indexes as tools to help pension plan sponsors and other investors evaluate the performance of active investment managers. The indexes also help investors assemble and evaluate a total portfolio by using benchmarks that reflect particular market segments based on objective criteria, such as capitalization and tradable shares.
Russell determined that $2.5 trillion in assets is benchmarked to Russell indexes, according to a cross-examination of Nelson Information's MarketPlace Web database, a Russell/Mellon client survey and Morningstar's DataLab.
About Thomson Nelson Information
Thomson Nelson Information, based in New York City, has been a leader in providing information and software to the global institutional investment community for more than 25 years. The firm's product line includes MarketPlaceWeb, proprietary databases, and a full line of comprehensive directories covering all facets of the institutional investment industry. For more information, go to www.marketplaceweb.com.
Russell Investment Group, global leader in multi-manager investing, provides investment products and services in more than 35 countries. Russell manages more than $135 billion in assets and advises clients worldwide representing more than $2.3 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo. For more information about Russell, go to www.russell.com.
Russell Investment Group is a registered trade name of Frank Russell Company, a Washington, USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of The Northwestern Mutual Life Insurance Company.
Indexes are unmanaged and cannot be invested in directly.