The large-cap Russell 1000 Index outperformed the small-cap Russell 2000 Index in 2005, ending a string of six consecutive years of underperforming the small-cap index.
Though the Russell 1000 barely reflected a positive total return in December(0.14%), it fared better than the Russell 2000 (-0.46%). This performance gap in December left the Russell 1000 with a 6.27% return for 2005, while the Russell 2000 reflected a 4.55% gain.
“Large-cap stocks had just enough oomph at year-end to push past small caps in 2005,” said Lori Richards, director, Russell Index Client Service. “The market-driven inclusion of Google in the Russell 1000 for the entire year of 2005 definitely gave that index a boost. Google now represents more exposure in the Russell 1000 than, for example, 3M, Boeing, Motorola or Comcast.”
While large caps outperformed small caps for 2005, neither could match the gain for mid caps. The Russell Midcap Index reflected a 12.65% gain.
All 12 sectors in the Russell Midcap increased in 2005, ranging from 3.2% for autos & transportation to 61% for other energy. The health care sector jumped 22% in the Russell Midcap, while managing only an 8.2% gain in the broad-market Russell 3000* Index.
The Russell Midcap continued to outperform other Russell indexes for the month of December with a 1.03% increase, though two sectors in the index (producer durables, -0.75% and financial services, -0.19%) stumbled slightly.
Nine of Russell’s family of US equity indexes reflected a negative return for December, though the worst-performing index (Russell Top 200* Growth Index) dipped only 0.85%. Even with some negative returns in December, every market segment reflected by a Russell index turned in a positive return for 2005, ranging from the Russell Top 50* Index (0.82%) to the Russell Midcap* Value Index (12.65%).
Richards added that the broad market’s lackluster performance in December, as represented by the Russell 3000, was driven in part by negative returns for integrated oils (-2.2%) and technology (-2.1%), which offset positive monthly returns for health care (2.8%) and materials & processing (2.1%).
In the Russell 1000, 53% of the stocks increased in value during December, including AMR Corp. (31.6%), Cephalon (27.3%) and JetBlue Airways (25.1%). While in the Russell 2000, 55% of the stocks decreased in value for the month, including Rigel Pharmaceuticals (-61.9%) and Orasure Technologies (-35%)
Overall, the market yielded a few more companies with negative monthly returns for December. The Russell 3000, which reflected a barely positive 0.09% gain for the month, included 1,560 companies with a negative monthly return. Five of the top 10 performing stocks in this index are in the health care sector-Abgenix (56.9%), Regeneron Pharmaceuticals (42.8%), Animas (41.8%), XenoPort (41.7%) and Myogen (38.7%).