US equities, the Russell 3000 better than the S&P500 over the past three months
Over the past three months, the Russell 3000 Index has gained 5.51%. In the same period, the S&P500 gained over one point less, 4.02%. And if we look at the strength ratio between the two US listings, the trend still seems to be in favour of the Russell.
In general, the Russell 3000, with its basket of 3,000 companies accounting for 98% of the US stock market, provides a more comprehensive view than the S&P 500, a more selective index often used as a benchmark for investments in large companies. For this reason, it is very useful to analyse both to get a more solid idea of the state of US equities. But lately the Russell, precisely because of its broad equity base, has been showing better results than the S&P500, which has been too influenced by the performance of the technology sector.
The strength ratio between the two indices, depicted in the chart above, shows how the scenario has definitely changed in the second half of 2024. There are several factors behind this turnaround, among them monetary policy and the performance of the technology sector. The prospect of falling interest rates has energised the small/medium capitalisation companies included in the Russell 3000, while on the other hand the ups and downs of the technology sector have affected the performance of the S&P500.
In terms of volatility, the two indices tend to be equivalent, suggesting another consideration. Over the past three months, the risk-adjusted return of the S&P500 has also been lower than that of the Russell 3000.
