Russell Indexes and Fidelity Index Funds

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tomdickorharry
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Russell Indexes and Fidelity Index Funds

Post by tomdickorharry »

Was doing some research on how small and mid caps are expected to do and wanted to check my 457b choices.

Looks like if I wanted to invest in a small cap index it's going to be Fidelity FSSNX. Per Market Watch it tracks the Russell 2000 Index. Thing is, I'm seeing that there are Russell 2000 indexes focusing on value, or growth, etc. The value index looks a bit better to me, at the moment.

But I guess this is just some plain jane Russell 2000 index? Curious how it compares with the value and growth Russell 2000's...
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retiredjg
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Re: Russell Indexes and Fidelity Index Funds

Post by retiredjg »

The Russell 200 index is divided into value, blend, and growth stocks. So what you are calling the "plain Jane" is all of it together.

Sometimes value stocks do better. Sometimes growth stocks do better. Just buy it all rather than try to predict which will do better during your investing time period.
sycamore
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Re: Russell Indexes and Fidelity Index Funds

Post by sycamore »

tomdickorharry wrote: Fri Jun 24, 2022 7:56 am Was doing some research on how small and mid caps are expected to do and wanted to check my 457b choices.

Looks like if I wanted to invest in a small cap index it's going to be Fidelity FSSNX. Per Market Watch it tracks the Russell 2000 Index. Thing is, I'm seeing that there are Russell 2000 indexes focusing on value, or growth, etc. The value index looks a bit better to me, at the moment.

But I guess this is just some plain jane Russell 2000 index? Curious how it compares with the value and growth Russell 2000's...
FSSNX follows the full Russell 2000 index. The Growth and Value indexes are subsets of the full one. The subsets focus on stocks that meet certain financial criteria, like price/book and such. You'd have to look at the Russell methodology to see exactly what.

You could compare all three in terms of their stock holdings, financial characteristics, price volatility, total return, etc. My guess is you're looking at the recent outperformance of the value index. After several years of underperforming growth, value stocks have done well the past year and a half.

I don't know how Growth or Value will perform (no one does, they can only guess) so be careful making investment decisions based on recent performance. Example: while Russell 2000 Value beat Growth by 27.9% to 2.5% in 2021, Growth beat Value by 34.6% to 4.6% in 2020.
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tomdickorharry
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Re: Russell Indexes and Fidelity Index Funds

Post by tomdickorharry »

Thank you.

No, actually I hadn't looked at recent performance. I was just reading an article on small caps regarding their greater flexibility in inflationary environments. (I actually pulled all of my money out of small and mid cap last year and put it all in large cap.) The article was talking about how the Russell 2000 growth fund contained stocks that tend to not do so well in these contexts and that the Russell 2000 value index was overweight with stocks that tend to do very well in this situation.

So, the Russell 2000 Value and Russell 2000 Growth indexes are not really 2000 companies, but rather a smaller subset of the Russell 2000 Index that met the "Growth" or "Value" criteria? That makes sense, I guess. I just thought they'd still be roughly 2000 companies.

Thank you for the help. Not sure how much I'll move, but I do think I should rebalance to get back into small cap at least at some percentage.
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retiredjg
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Re: Russell Indexes and Fidelity Index Funds

Post by retiredjg »

The Russell index makers split the total market into two parts. Russell 1000 is about 1000 of the largest companies and Russell 2000 is the mid and small cap companies.

Yes. Russell 2000 value index is just the value portion of the roughly 2000 companies. Russell 2000 growth index is just the growth portion of the roughly 2000 companies. Then there is a blend portion with are stocks that fall sort of in between value and growth. So the roughly 2000 stocks of the Russell 2000 index fall into these 3 categories. I don't know for sure, but it is probably about 1/3, 1/3, and 1/3.
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grabiner
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Re: Russell Indexes and Fidelity Index Funds

Post by grabiner »

retiredjg wrote: Fri Jun 24, 2022 4:11 pm The Russell index makers split the total market into two parts. Russell 1000 is about 1000 of the largest companies and Russell 2000 is the mid and small cap companies.
The 1000 largest companies include most definitions of mid-caps; they are the top 90% of the market. The Russell 2000 is almost all small-caps. (For comparison, Vanguard Small-Cap Index starts at 85% of the market, so it has a somewhat higher cap range. The S&P 600 is about the same cap range as the Russell 2000.)
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retiredjg
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Re: Russell Indexes and Fidelity Index Funds

Post by retiredjg »

Smaller than I thought. Thanks.
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