Russell Indexes Measure 63% of Institutional Products

An annual study of institutional investors and their equity benchmarks shows that usage of the Russell Index family continues to grow while other index groups face flat or declining market share. Russell’s indexes rank as the most widely used set of U.S. equity benchmarks among institutional investment products and account for an industry-leading 63.3% of the benchmarks in funds used by corporate pension plans and other institutional investment organizations. In addition, Russell’s indexes account for 55.6% of all institutional assets benchmarked.

The survey also found that Russell’s U.S. indexes represent 11 of the top 12 benchmarks in terms of the number of products as well as the amount of assets benchmarked. The Russell 3000® Index continues to rank as the most commonly used U.S. broad-market equity benchmark and the Russell 2000® Index dominates in terms of usage for small-cap products and amount of assets benchmarked. Nearly all institutional assets benchmarked to a small-cap index rely on the Russell 2000 ($263.7 billion), Russell 2000® Value Index ($146.3 billion) and Russell 2000® Growth Index ($120.7 billion). Ranking fourth among Russell’s small- and SMID-cap options, the Russell 2500™ Index increased about 20% from last year’s total to $79.3 billion.

“The Russell 2000 clearly is the industry standard for professional investors who focus on the small-cap segment, and those who seek a SMID-cap option seem to be turning to the Russell 2500,” said Kelly Haughton, strategic director for Russell Indexes.

Russell’s two large-cap style indexes—Russell 1000® Growth Index and Russell 1000® Value Index—combined account for more than $1.1 trillion in institutional assets, and each has more assets benchmarked to it than the Russell 2000.

These findings were determined by an examination of 3,333 U.S. equity products listed in Nelson Information’s MarketPlace web database that reported using a benchmark. A report on this year’s study is available at http://www.russell.com/indexes/about/articles/the_gap_widens.asp.

“Our indexes were specifically created as broadly representative and unbiased performance benchmarks for use in Russell’s multi-manager investment business,” said Haughton. “More investors are relying on our comprehensive approach to tracking the global equity market in order to measure the relative performance of their funds.”

This year’s study shows Russell’s family of indexes stands as the only major set of benchmarks to gain market share based on product usage, continuing a trend identified by Nelson in its original survey of benchmark usage. At 63.3%, today, Russell’s market share has increased from 18.5% in 1996 to 27.9% in 1998, 39.3% in 2002, 48.6% in 2004 and 54.5% in 2006.

Individually, the top 10 U.S. equity benchmarks ranked by the number of products include these nine in descending order: Russell 2000, Russell 1000 Growth, Russell 1000 Value, Russell 2000 Growth, Russell 2000 Value, Russell 2500, Russell 3000, Russell Midcap® Growth Index and Russell Midcap® Value 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 market capitalization and tradable shares.

More than $4.4 trillion in assets are benchmarked to Russell indexes, according to a cross-examination of Nelson Information’s MarketPlace Web database, a Russell index client survey and Morningstar’s Direct database.

About Russell

Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. Russell has more than $211 billion in assets under management as of June 30, 2008, and serves individual, institutional and advisor clients in more than 40 countries. Founded in 1936, Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.

Russell Investments is the owner of the trademarks, service marks and copyrights related to its indexes.

Russell’s indexes are unmanaged and cannot be invested in directly.