What is the Russell 1000 Stock Index?
The Russell 1000 is a stock index that tracks the performance of the 1,000 largest US companies weighted by market capitalization. It is a subset of the Russell 3000, which contains nearly all of the securities traded on the NYSE and Nasdaq stock exchanges.
You’d think an index containing almost all large-cap stocks traded on US exchanges would draw a lot of attention, but it seems like more ink is being spilled on the Russell 2000 Index because it’s considered a benchmark for the small cap sector.
Small-cap companies can be notoriously volatile, and their low trading volume often means it’s hard to understand their price movements, which makes having an index like the Russell 2000 especially useful. Mutual fund managers, in particular, often track their portfolio performance against the Russell 2000.
Why is the Russell 1000 important?
Just because analysts keep a close eye on the Russell 2000 doesn’t make the Russell 1000 any less important. Investors can turn to the Russell 1000 to see at a glance how large and mid-cap companies are performing. In fact, the Russell 1000 is a much broader index than the S&P 500 as it is made up of nearly twice as many companies and as such its performance could be considered a more accurate reflection of the US stock market in its set.
How is the Russell 1000 weighted?
Each component of the Russell 1000 is weighted by market capitalization, or the total market value of all shares outstanding. Capitalization-weighted indices like the Russell 1000 differ from other indices, like the Dow Jones Industrial Average, which are weighted by stock price.
The Dow is often criticized for being weighted in this way, since price is the only measure of its value and that doesn’t provide the most accurate view of the stock it’s tracking. For example, when a stock splits, its share price is halved and would therefore be worth considerably less to the index unless adjustments are made to the index divisor.
What companies make up the Russell 1000?
The names that make up the Russell 1000 are some of the biggest companies in the stock universe. They range in size between $1.8 billion and $1.4 trillion. Here are the 10 largest holdings in the Russell 1000, as well as the sectors they represent:
Company | Industry |
---|---|
Apple (AAPL) |
Technology |
Microsoft (MSFT) |
Technology |
Amazon (AMZN) |
Discretionary Consumption |
Berkshire Hathaway (BRK.B) |
Finance |
Alphabet (Class A) (GOOGL) |
Technology |
UnitedHealth Group (UNH) |
Health care |
Alphabet (Class C) (GOOG) |
Technology |
Johnson & Johnson (JNJ) |
Health care |
ExxonMobil (XOM) |
Energy |
JPMorgan Chase (JPM) |
Finance |
To see the full list of Russell 1000 components, visit the FTSE Russell website.
Who manages the Russell 1000?
The Russell 1000 is managed by FTSE Russell, a subsidiary of the London Stock Exchange Group, which has provided benchmarking, analysis and data solutions for investors since 1995.
FTSE Russell indexes different segments of the stock market, classifying them by size (from micro-cap to large-cap) as well as by investment style (growth and value). It offers several different variations of the Russell 1000 alone:
- Russell 1000 value
- Russell 1000 Growth
- Russell 1000 Defensive
- Russell 1000 dynamic
What is “Russell rebalancing”? Is the Russell 1000 affected?
Each year, the FTSE group examines the constituents within the Russell 1000, Russell 2000 and Russell 3000 indices and determines whether to add or remove stocks from the indices. This practice is known as “Russell Rebalancing.”
Analysts rank the universe of US-based stocks first by market capitalization, with the largest 3,000 stocks added to Russell’s 3,000. They then further rank the list by float-adjusted market capitalization, and these stocks are “pooled” into the Russell 1,000 and Russell 2,000 indices.
Adding or subtracting a company from a Russell index can cause a huge swing in share prices, as many institutional investors include Russell components in their portfolios and adjust their holdings to reflect changes in the index.
In fact, the entire stock market is watching the Russell rebalancing date closely. It usually takes place on the fourth Friday of June.
How can I buy the Russell 1000?
The ticker symbol for the Russell 1000 is ^RUI; however, you cannot invest directly in the Russell 1000 because it is non-tradable. However, there are several ETFs and mutual funds that track the index, such as the Vanguard Russell 1000 Mutual Fund (VRINX) and the iShares Russell 1000 Index ETF (IWB). Check with your online broker for the complete list.
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