Large-cap style indexes from S&P/Barra and Russell show a big difference in returns for the quarter ended June 30, a disparity that will complicate portfolio evaluation, according to Ronald J. Surz, president of investment consulting firm PPCA. The S&P/Barra 500 Value index returned 2.6%, while the Russell 200 Top Value index returned 0.3%; the S&P/Barra 500 Growth index returned 0.1%; and the Russell 200 Top Growth index returned 2.1%.
"This type of contradiction, while rare, is explained by the differences in methodology (in) how stocks in the gray area, between value and growth, are treated by S&P and Russell," Mr. Surz wrote in a report. "Russell deals with this issue by pro rata, allocating these fuzzy stocks into both value and growth. S&P ignores the problem altogether by drawing a hard line that divides half of the market's value between value and growth."
A Russell spokesman confirmed the Top 200 Value index, which has 135 stocks, and the Top 200 Growth index, which has 138 stocks, have some stocks in common. He was unable to respond immediately about the reason for the differences.
The S&P/Barra 500 Value index has 178 stocks, and the S&P/Barra 500 Growth Index has 322 stocks, according to the S&P website. S&P/Barra officials couldn't be reached for comment.