Tag: market

A Moving Yardstick: Dynamic Risk Profiles of the Indexes (October 2026)

Posted on by Amanda Ahne

Insights from the Value Equities Investment Committee | PDF

Benchmark index construction rules generally do not account for fundamentals, underlying quality, or risk management

We’ve written at length about the rules that determine the composition of the style indexes against which many active managers are benchmarked. An index’s composition is a function of mechanical rules, not a stable definition of “value” or “growth.” Those rules cause companies to shuffle in and out of the Growth and Value indexes, and cause weightings to evolve dramatically over short periods, based on market sentiment. As a result, the Russell 1000 Value Index carries a risk profile that can change (and has changed) meaningfully within a single year and could shift again at each style reconstitution in June.

We don’t expect clients to monitor every nuance of index construction methodology. But we do think it is important for advisors to understand just how dynamic a style index’s risk profile really is, particularly since most clients have risk profiles that remain stable from year to year.

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A Narrow Market (July 2026)

Posted on by Amanda Ahne

Insights from the Value Equities Investment Committee | PDF

“The four most dangerous words in investing are: this time it’s different.”

— Sir John Templeton

SETTING THE STAGE

In two earlier publications, we examined the construction and evolution of the Russell 1000 Value Index. In “​Shining a Light on Indexes​,” we explored the inherent limitations of passive, market cap-weighted benchmarks and why their composition and risk profile can diverge meaningfully from the strategies that use them as reference points. In “​Understanding the Benchmark​,” we took a closer look at how the Growth and Value indexes are structurally linked, demonstrating how the extraordinary concentration of market capitalization in a small group of mega-cap growth companies has pushed the Value index to absorb businesses that, by traditional measures, would not have been considered value stocks at all. Together, these pieces made the case that the indexes are more complex and dynamic instruments than they might appear.

We now examine the current return profile of the Russell 1000 Value Index, which offers a real-time illustration in narrow market leadership and why understanding it matters for evaluating active managers during periods like this one.

A NARROW MARKET

Through June 12, 2026, the Russell 1000 Value Index is up approximately 14% — a stellar start to the year by any measure. Performance like this can create the impression of broad-based economic strength, and it would be reasonable for the average investor to assume those gains reflect health across a wide range of businesses. When one looks beneath the surface, however, a very different story emerges.

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