How Russell Index Changes Impact ETFs

June 28, 2017

Global index provider FTSE Russell just completed its annual reconstitution of key Russell indices, adjusting their mix to reflect changes in companies’ size as determined by market capitalization as well as style fit over the previous year.

In a recap of the main trends seen in this year’s reconstitution, the index provider noted that the total market cap of the Russell 3000 grew some 13% to a record $27.2 trillion, primarily due to market performance. The U.S. equity market has gotten bigger.

Higher Large/Small-Cap Breakpoint

Along with that came a higher “breakpoint” between large- and small-cap stocks, now at $3.4 billion, up from $2.9 billion just a year ago.

Among the names highlighted in this year’s U.S. index reconstitution was Apple, which again was the largest company in the Russell 3000 Index, five years running. The tech giant is also now considered a 100% growth stock, a change from its year-earlier style split as 92% growth/8% value.

J.P. Morgan rose to be among the 10 largest U.S. companies, while Facebook and Amazon cemented their ranks among the biggest names in the U.S. market somewhat at the expense of ExxonMobil, which moved down a notch.

The Russell 1000 Index, capturing U.S. large-cap stocks, added 41 names and lost 44, including the likes of JCPenney, Fitbit and Yelp. 

In the small-cap space, as represented by the Russell 2000, some 228 companies were added to the benchmark, many in the financial and banking sector as well as health care names, particularly biotech. Names like Hertz, Dillard’s, Avis Budget Group and Frontier Communications joined the index. A total of 137 stocks left the mix, either moving up to the Russell 1000, or down to the micro-cap space. 

 

Find your next ETF

CLEAR FILTER