index funds

Third Quarter Index Wrap

index funds

A sagging stock market continued to drag down most equity indexes in September, and third quarter returns were likewise ugly. The broad Russell 3000 index fell 16.2% during the third quarter on the heels of a 13.1% decline in the second quarter, according to the Frank Russell Company. The third quarter was the worst for the Russell 3000 since the fourth quarter of 1987, when the index lost 23%.

"Any remaining pockets of positive performance dried up in the third quarter," said Dennis Jensen, an analyst at Russell. "Stocks performed poorly across the board with little regard for sector or investment style."

Jensen noted that the Russell 3000, which reflects 98% of investable shares in the U.S., has plunged 44% since reaching an all-time high in the heady days of September 2000. Also, Q3 of 2002 is the first time the Russell 3000 has suffered double-digit losses for two consecutive quarters. Finally, 90% of all stocks in the broad domestic index lost value in Q3.

Small-caps and value hit hard in quarter

In the third quarter, the small-cap Russell 2000 lost 22%, compared to a 15.8% decline for the large-cap Russell 1000. It was also a tough quarter for value stocks, which reverses the trend thus far in 2002. The Russell 3000 Value index lost 18.1%, while the Russell 3000 Growth index declined 14.2%.

Russell index returns

Index
September 2002
Q3 2002
YTD 2002
Russell 3000
-10.51%
-17.23%
-27.37%
Russell 3000 Value
-10.84%
-18.96%
-22.12%
Russell 3000 Growth
-10.18%
-15.49%
-32.85%
Russell Midcap
-9.23%
-17.64%
-22.34%
Russell Midcap Value
-10.10%
-17.95%
-15.61%
Russell Midcap Growth
-7.94%
-17.18%
-33.50%
Russell 2000
-7.18%
-21.40%
-25.10%
Russell 2000 Value
-7.14%
-21.29%
-15.58%
Russell 2000 Growth
-7.22%
-21.52%
-35.13%
Russell 1000
-10.74%
-16.91%
-27.56%
Russell 1000 Value
-11.12%
-18.77%
-22.65%
Russell 1000 Growth
-10.37%
-15.05 %
-32.70%
Source: Russell Indexes, data as of 9/30/02

S&P index returns

Index
September 2002
Q3 2002
YTD 2002
S&P 500
-10.87%
-17.28%
-28.16%
S&P 500/Barra Value
-11.43%
-20.46%
-27.98%
S&P 500/Barra Growth
-10.35%
-14.12%
-28.66%
S&P MidCap 400
-8.06%
-16.55%
-19.23%
S&P MidCap 400/Barra Value
-9.84%
-18.48%
-15.64%
S&P MidCap 400/Barra Growth
-6.23%
-14.56%
-23.11%
S&P SmallCap 600
-6.12%
-18.61%
-18.63%
S&P SmallCap 600/Barra Value
-7.36%
-22.52%
-18.28%
S&P SmallCap 600/Barra Growth
-4.94%
-14.64%
-19.49%
S&P 100
-11.47%
-16.54%
-29.48%
S&P 1000
-7.45%
-17.19%
-19.03%
S&P SuperComposite 1500
-10.49%
-17.27%
-27.21%
S&P REIT Composite
-4.00%
-8.91%
8.84%
Source: Standard & Poor's Indexes, data as of 9/30/02

Briefly noted

Barclays Global Investors said it would close three iShares exchange-traded funds on December 5, 2002: iShares Dow Jones U.S. Chemicals Index Fund (IYD), iShares Dow Jones US Internet Index Fund (IYV), and iShares S&P/TSE 60 Index Fund (IKC). The funds will be liquidated December 6 through 13, according to BGI. Shareholders remaining on December 13 will receive the net asset value (NAV) of their shares as of December 13, and any capital gains and dividends. BGI said the iShares Board of Trustees decided to close the funds "as investors seek broader exposure in the markets represented by other funds."

International week rolls on . . .

We promised you articles on using international stocks to diversify your portfolio, and we haven't forgotten our pledge. Look for upcoming interviews with experts from index providers MSCI and FTSE on global style indexes, and also a chat with international stock whiz Steven Schoenfeld of Barclays Global Investors.