Russell Indices Rebalance Today

As if the "well-contained subprime mortage" issue wasn’t adding enough volatility, today is the Russell Indices rebalancing.

Newly re-constructed Russell indices (Global, 1000, 2000, 3000 and Microcap) will take effect after the the NYSE close at 4pm. Based on preliminary Russell information, 154 NYSE-stocks will be added or deleted to the indices.

This tends to play a little havoc with prices, above and beyond today’s volatility.

We most recently looked at the S&P500 trivia on the occasion of their 50th anniversary. Here is some Russell trivia:

• The Russell 3000 (combined market cap) reflects about 98% of the investable U.S. equity universe, increased more than $3 trillion (from $15.3 to $18.5 trillion).

• The Russell Global Index includes 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).

• There are 277 "additions" for the Russell 3000 — more than last year’s 237 additions, but far less than the 10-year average of 405.

• A third of this year’s additions are in two sectors: financial services (57) and health care (48).

• Sector changes (weighting):
    -Energy services sector will increase (3.9% to 4.6%)
    -Health care sector will decline (12.1% to 11.9%).
    -Financial services (22.4%) and Consumer discretionary (13.4%) are the largest sectors.

• Turnover is between 2% and 2.5%,

• A total of 128 IPOs will join the Russell 3000 this year; In 2006 new IPO adds = 122; In 2003, it was = 28.

•  Of the 310 companies going into the Russell Microcap Index, 67 are dropping into the index from the Russell 3000.

• 184 companies will completely leave the Russell’s index universe entirely.

The final membership lists for the Russell 3000, Russell 2000 and Russell 1000® will be posted June 25.

UPDATE: June 24, 2007 7:11am

Paul points to this ITG chart, showing a very modest number of adds and deletes for the Russell 2000:



Russell Set to Restock U.S. and Global Indexes
Tacoma, WA — June 11, 2007

What's been said:

Discussions found on the web:
  1. long-time reader commented on Jun 22

    The Russell 1000 or 3000 should be the investment benchmark, not SP 500.

    SP 500 = the QWERTY keyboard/Windows/VHS of the investing community.

    (Not that it really matters THAT much as SPX and RUA correlate highly and have similar historical characteristics. Just a matter of principle.)

  2. SINGER commented on Jun 22


    …are you talking to underwriters for the 2008 launch of the RR&A IPO…which will take place on an overseas exchange due to more lenient listing requirements…i hear the liquidity in Iceland is improving…

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