Index provider FTSE Russell recently completed the annual reconstitution of its Russell indices, which among other changes redefined the breakpoints between its large, mid, and small cap indices. These changes took effect at the close of trading on June 28.
To better help institutional investors make sense of the process, I have highlighted some of the major changes, organized by index, using information supplied by FTSE Russell:
Broad Indices
Russell 3000
- Market capitalization hit another high: $31.7 trillion, up from $30.7 trillion at 2018’s reconstitution
- Large cap/small cap breakpoint fell to $3.6 billion from $3.7 billion
- Biggest companies: #1 Microsoft, #2 Amazon, #3 Apple. Apple fell from the top spot for the first time since 2011.
Russell 1000
- Market cap up 4% to $29.3 trillion
- 48 companies added
- 35 promoted from Russell 2000 Index; 11 in the Consumer Discretionary sector, 13 in Technology
- 9 additions were new to the Russell index universe
- 4 initial public offerings (IPOs) added: Beyond Meat, Lyft, Pagerduty, and Uber
Russell 2000
- Market cap fell 4% to $2.4 trillion
- 185 companies added
- 156 dropped
- 27 IPOs (most from Health Care and Financial Services)
Value and Growth
Russell 1000 Growth
- Biggest addition, by company size: Procter & Gamble, which shifted from a 100% allocation in the value index to a 94% value, 6% growth weighting
- Biggest addition, by index weight: Cisco Systems, which shifted from 100% value to 100% growth
- Biggest departure, by weight: Walt Disney (from 72% growth to 100% value)
- Biggest departure, by size: Berkshire Hathaway (from 13% growth to 100% value)
- Largest sector: Technology; also had the biggest gain in weight (34.1% to 37.3%)
- Producer Durables fell the most in size, from 12.7% to 10.9%
Russell 1000 Value
- Largest addition, by size and weight: Home Depot (100% growth to 43% value)
- Largest departure, by weight: Cisco Systems
- Largest departure, by size: Microsoft (from 5% value to 100% growth)
- Largest sector: Financial Services (from 28.6% to 29.3%)
- Biggest increase in weight: Producer Durables, from 7.5% to 9.2%
- Biggest fall in weight: Technology, from 8.8% to 5.7%
Russell 2000 Growth
- Largest departure, by size: Roku (moves to Russell 1000 Growth Index)
- Largest departure, by weight: Etsy (also goes to Russell 1000 Growth Index)
- Largest sector: Health Care; also saw biggest increase in weight (25.5% to 28.0%)
- Biggest drop in weight: Consumer Discretionary (18.3% to 13.8%)
Russell 2000 Value
- Largest departure, by size: Guardant Health (moves to Russell 1000 Index with a 100% growth allocation)
- Largest departure, by weight: Cree (also goes to the Russell 1000 Index with a 92% value allocation)
- Largest sector: Financial Services (42.4%)
- Biggest drop in representation: Technology (10.7% to 7.3%)
- Biggest gain in weight: Energy (5.0% to 7.2%)
