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| ETF
Spotlight -- Russell 2000 iShares (IWM) |
Published: May 3, 2004
The Frank Russell Company tracks the 3,000 largest
U.S. firms that trade on one of the three major U.S. exchanges--the New
York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the
Nasdaq. The company's best-known index is the Russell 2000. This index
tracks the performance of the 2,000 smallest of these firms, and is
commonly used as the benchmark against which most small-cap mutual funds
are judged.
I personally find it difficult to consider the Russell 2000 a small-cap
index given that it includes such companies as Louisiana Pacific (LPX,
$23.59), Conexant Systems (CNXT, $4.39) and AMR Corp. (AMR, $11.35), all
of which boast market caps of roughly $1.5 to $2.0 billion. Of course,
these were once considered large-cap stocks until the market began to
nosedive in the year 2000.
It's important to understand that the Russell 2000
index goes through a substantial revision every year on July 1st.
Starting in late May, Russell ranks the market caps of all stocks in the
United States. It then reconstitutes its indices and announces the
preliminary lists by late June.
The oddity of all this is that the Russell 2000 automatically loses some
of its best performers. Why? Well, the top-performing stocks often
become too large for the Russell 2000, and thus move into the Russell
1000 (a list of the 1000 largest companies traded in the U.S.).
Meanwhile, some laggards from the Russell 1000 fall back into the
small-cap universe of the Russell 2000. This may be why fund managers
like this index as a benchmark--it is easier to beat due to this
reconstitution every year!
| Russell
2000 iShares (IWM) |
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| Type: |
Broad Index |
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| Similar funds: |
Russell
2000 Growth (IWO) |
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Nasdaq-100
Trust (QQQ) |
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Russell
2000 Value (IWD) |
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| Options?: |
Yes,
Moderately liquid |
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| Performance
Data |
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|
| 52-week High: |
$121.15 |
4/8/2004 |
|
Annualized
return since: |
| 52-week Low: |
$78.49 |
5/1/2003 |
|
One-year |
41.21% |
| YTD Return: |
0.47% |
|
|
Three-year |
5.63% |
|
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|
|
Five-year |
N/A |
| Dividends: |
$1.06 |
past
12-mos |
Life of fund* |
6.53% |
| Expense Ratio: |
0.20% |
|
|
*
- Started trading 5/26/2000 |
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| Correlation
Data* |
(1/02/02-4/30/04) |
Holdings* |
(as of 4/28/2004) |
| Dow
Jones Industrials |
82.1% |
|
OSI Pharma (OSIP) |
0.32% |
| S&P 500 |
|
86.5% |
|
Andrew Corp (ANDW) |
0.31% |
| Nasdaq
Composite |
89.2% |
|
Louisiana Pacific (LPX) |
0.28% |
| Nasdaq-100 |
|
84.0% |
|
Cytyc Corp (CYTC0 |
0.25% |
|
|
|
|
MGI Pharma (MOGN) |
0.24% |
| IWO |
|
94.7% |
|
Covance Inc (CVD) |
0.23% |
| QQQ |
|
82.3% |
|
Activision Inc
(ATVI) |
0.22% |
| IWD |
|
83.7% |
|
NBTY Inc. (NTY) |
0.22% |
|
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Conexant Systems
(CNXT) |
0.22% |
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AMR Corp (AMR) |
0.21% |
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* Percent top ten
are of total |
2.50% |
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| Average
Daily Volume |
|
Average
Daily Price Range |
| Apr-04 |
6,132,229 |
|
|
Apr-04 |
2.0% |
| 2004 YTD |
5,614,192 |
|
|
2004 YTD |
1.8% |
| 2003 |
2,310,314 |
|
|
2003 |
1.7% |
| *
- Correlation measures how closely the two items track each
other |
|
*
Includes prior day's close (true range) |
HOW TO MAKE MONEY IN IWM THIS
YEAR
There is a strong risk that the Russell 2000 has already topped. The
lower volume on rallies than the volume recorded when IWM falls is
bearish. However, as of now, I am going with the idea that IWM can fall
to at least the $106 area (and possibly close to, or slightly below,
$100). After that it should mount a substantial rally.
The risks in the short term are about even sided in
either direction. The fun could fall roughly $5 to $11, but it could
also probably rally about $5 to $8. Looking at the bigger picture,
however, I'd be amazed if IWM did not fall to at least $92 in the next
12 months.
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