The U.S. market performed relatively well during the third quarter. News regarding turbulence in Syria did not shake the developed markets, and investors grew optimistic when the United States saw an opportunity to resolve the issue peacefully. Concerns regarding the potential for the U.S. Federal Reserve to begin tapering its quantitative easing program contributed to a downturn in August. However, markets reacted positively to the Feds surprising decision on September 18 not to taper, as well as assurances from Chairman Ben Bernanke that the Fed would not trim the asset purchase program until economic growth had become self-sustaining.
The Small Cap Index Fund returned 10.16% during the third quarter of 2013, closely tracking the 10.21% return of the Russell 2000® Index. Small-cap stocks outpaced the 6.02% return of the large-cap Russell 1000® Index by a wide margin. Small-cap performance was helped by elevated investor risk appetite and signs of improving growth in the U.S. economy. Smaller companies tend to have more of a U.S.-based focus than their large-cap counterparts, which makes them particularly sensitive to domestic growth trends. The Russell 2000® Index posted a one-year total return of 30.06%, well ahead of the 20.91% return of the Russell 1000® Index.
The top-performing sectors in the Russell 2000® Index were health care and information technology, which returned 15.03% and 14.15%, respectively. The weakest sectors were utilities and financials, which returned -0.84% and 5.33%, respectively.
If you are an aggressive investor seeking competitive long-term investment returns through a broadly diversified portfolio, this Fund may be appropriate for you. It seeks to offer investment results, before expenses, approximating the aggregate price and dividend performance of the securities included in the Russell 2000 Index.
- Passively managed, the Fund seeks to duplicate the investment composition and overall performance of the stocks included in the Russell 2000® Index.
- Invest at least 80% of its net assets in equity securities in the Index, in weightings that approximate the relative composition of the Index.
- Use proprietary quantitative techniques designed to minimize trading costs.