Russell Investment Group has posted its official lists of companies that will join or leave the broad-market Russell 3000 index when its U.S. equity indexes are reconstituted on June 22.
These lists of U.S. companies — and lists of additions and deletions for the Russell Global Index — are posted on www.russell.com.
The combined market capitalization of stocks in the Russell 3000, which reflects about 98% of the investable U.S. equity universe, has increased more than US$3 trillion from US$15.3 trillion at this point last year to US$18.5 trillion today.
“After surging 22.6% in total return for the year ending May 31, the Russell 3000 has gained some weight,” said Steve Wood, senior portfolio strategist for Russell, a release. “But not all stocks moved upward and some sectors didn’t fare as well as others. The annual reconstitution process captures those changing fortunes and recalibrates the indexes to accurately measure current market realities.”
With the launch of Russell Global Indexes earlier this year, the reconstitution process has become a world-wide undertaking. The Russell Global Index, which offers comprehensive coverage of the investable global market, will include more than 10,700 stocks from 63 countries. Countries with the largest number of additional companies joining the index include Australia (109), the United Kingdom (93), Hong Kong (92), Canada (90) and India (66). The Russell 3000 is the U.S. component of the global index.
Today’s “additions” list for the Russell 3000 shows that 277 companies will move into the broad-market index–more than last year’s 237 additions but far less than the 10-year average of 405. About one-third of this year’s additions are in two sectors: financial services (57) and health care (48). Alternatively, only seven stocks in the consumer staples sector will flow into the index this year.
Among the total of 12 sectors, slight changes are expected in terms of weighting within the index. The energy services sector likely will increase from 3.9% at this point last year to 4.6%, while the health care sector (despite the number of additions) likely will decline in weighting from 12.1% to 11.9%. Financial services (22.4%) and consumer discretionary (13.4%) will remain the largest sectors.
“Turnover is always low in the broad-market Russell 3000, and it is expected to be similar to prior years at between 2% and 2.5% this year,” said Lori Richards, client service director for Russell indexes. “Turnover in more specific capitalization segments, such as the small-cap Russell 2000 Index, is expected to be lower this year as well given the low market volatility between large and small cap stocks. This is also due, in large part, to our rules-based methodology that adds IPOs on a quarterly basis and several other recent enhancements such as percentile banding.”
Since last year’s reconstitution process, 92 IPOs have joined the Russell 3000. An additional 36 IPOs that came to market during the second quarter will be added June 22 as part of the reconstitution process. The total of 128 for this year slightly tops last year’s 122. In 2003 only 28 IPOs flowed into the index.
Russell set to restock U.S. and global indices
Annual process ensures investment benchmarks reflect market realities
- By: IE Staff
- June 12, 2007 June 12, 2007
- 10:10