Digesting Top Holdings of New Russell Small Cap ETF Strategies (SGGG, SCOG, SCLP, SCTR, LQDT, ULTA, AMN, SUG)

Russell Investments is already very well-known among mutual fund and index investors, but it is getting deeper into the world of exchange-traded funds. Word came today that four new exchange-trades funds have been launched around the theme of small cap stocks.  The aim is companies with near-term forecasted earnings that are expected to increase at a faster rate than those of the average company’s earnings 

Each ETF is said to mirror the way equity managers tend to invest in the small cap asset class outside of mere sectors and styles.  They are based upon the newly created Russell U.S. Small Cap Investment Discipline Indexes. 

The new small cap ETFs are as follows: Russell Small Cap Aggressive Growth ETF (NASDAQ: SGGG); Russell Small Cap Consistent Growth ETF (NASDAQ: SCOG); Russell Small Cap Low P/E ETF (NASDAQ: SCLP); and the Russell Small Cap Contrarian ETF (NASDAQ: SCTR).  The companies which appear in more than one of the new funds in the top ten holdings are as follows: Liquidity Services, Inc. (NASDAQ: LQDT); Ulta Salon Cosmetics & Fragrance, Inc. (NASDAQ: ULTA); Ameron International Corporation (NYSE: AMN); and Southern Union Co. (NYSE: SUG).  The breakout of the top holdings (as of 9/30) is below.

Russell Small Cap Aggressive Growth ETF (NASDAQ: SGGG) tracks the total return of the Russell U.S. Small Cap Aggressive Growth Index and selects securities intended to produce performance that is similar to professional investment managers using a small cap aggressive growth investment discipline.   This is very diversified because the top ten holdings do not even equate to 5% of the full holdings:

• LIQUIDITY SERVICES INC .60%
• NXSTAGE MEDICAL INC .51%
• SEATTLE GENETICS INC .49%
• COMMVAULT SYSTEMS INC .49%
• CEPHEID .48%
• LOGMEIN INC .48%
• MAXWELL TECHNOLOGIES INC .48%
• BLACKBOARD INC .48%
• ENDOLOGIX INC .48%
• ULTA SALON COSMETCS & FRAG INC .48%
• Total 4.97%

Russell Small Cap Consistent Growth ETF (NASDAQ: SCOG) tracks the total return of the Russell U.S. Small Cap Consistent Growth Index with securities intended to produce performance that is similar to professional investment managers using a small cap consistent growth investment discipline.  This discipline focuses on companies with above average earnings expectations over a long-term horizon and with consistent historical earnings growth that starts with the Russell 2500.  The fund is also very diversified and top ten holdings are as follows:

• Liquidity Services, Inc. .68%
• Higher One Holdings, Inc. .59%
• USANA Health Sciences, Inc. .59%
• Ulta Salon Cosmetics & Fragrance, Inc. .58%
• SonoSite, Inc. .58%
• NeuStar, Inc. .58%
• Body Central Corp. .57%
• iGate Corp. .57%
• Tyler Technologies, Inc. .57%
• Landstar System, Inc. .56%
• Total 5.87%

Russell Small Cap Low P/E ETF (NASDAQ: SCLP) tracks the total return of the Russell U.S. Small Cap Low P/E Index.  It selects securities intended to produce performance that is similar to professional investment managers following a small cap low price to earnings investment discipline. This discipline focuses on companies that are trading at lower multiples relative to their prior level and/or their industry peers.  It is very diversified and the top ten holdings are as follows:

• SOUTHERN UNION CO NEW .43%
• ARCH CHEMICALS INC .42%
• AMERON INTL INC .41%
• S1 CORPORATION .40%
• ADVANCE AMER CASH ADVANCE CTRS .38%
• KINETIC CONCEPTS INC .36%
• WASTE CONNECTIONS INC .34%
• IAC INTERACTIVECORP .34%
• HEXCEL CORP NEW .34%
• CASEYS GEN STORES INC .34%
• Total 3.76%

Russell Small Cap Contrarian ETF (NASDAQ: SCTR) aims to go against the grain.  It tracks the total return of the Russell U.S. Small Cap Contrarian Index, which is designed to select securities intended to produce performance that is similar to professional investment managers following a small cap contrarian, deep value investment discipline. It selects securities intended to produce performance that is similar to professional investment managers following a small cap contrarian, deep value investment discipline. This discipline focuses on companies that have lagged the market but where opportunities exist for the stock price to improve.  It is the least diversified of these new ETFS but still is very diversified with no stock equating 1% of the fund:

• SOUTHERN UNION CO NEW .75%
• AMERON INTL INC .71%
• GLOBAL INDS LTD .71%
• PHARMERICA CORP .65%
• WRIGHT MED GROUP INC .64%
• TNS INC .64%
• TRANSATLANTIC HLDGS INC .58%
• MUELLER INDS INC .58%
• HARTE-HANKS INC .58%
• LACLEDE GROUP INC .57%
• Total 6.41%

JON C. OGG