FTSE Russell’s June 2026 reconstitution took effect on June 26, and official changes to its indices were reflected at the market open on June 29. The reconstitution allows for stock additions to and deletions from the indices—including its widely used suite of Russell benchmarks that track U.S. stocks—re-calibration of market cap breakpoints between indices, and re-evaluation and subsequent characterization of the stylistic classification of stocks.

Highlights of the June 2026 Reconstitution

A full summary of the changes for the Russell June 2026 rebalance can be found here. Below are what we view as the most notable features and changes associated with the reconstitution, broken out by capitalization and style:

Large Cap

Concentration remains a hallmark of the U.S. equity markets. This is reinforced by the stability of the top 10 stocks, both in membership and continued growth in the group’s aggregate market capitalization. Compared to last year, this cohort of stocks only experienced one change (Walmart replacing Eli Lilly) and minimal re-shuffling of ranks based on market cap. In terms of total market cap, the top 10 grew nearly 50% to $26 trillion; 10 companies vs. 7 companies in 2025 now exceed $1 trillion in market cap.

We continue to see concentration in other ways within the large cap benchmarks, specifically in the Russell 1000 Growth Index. The benchmark remains technology-dominant; Information Technology and Communication Services (to which Alphabet and Meta belong) account for nearly 70%. While this concentration is not new, it is more pronounced with this reconstitution with certain stocks, such as semiconductors shifting in their style allocations.

The number of holdings in the Russell 1000 Growth Index also continues to decline: over the past 10 years, from the mid-600s to the mid-300s.

Most notably, changes to the large cap style indices reflect the continued outperformance for artificial intelligence (AI) and AI-adjacent stocks. Significant changes/characteristics include:

• Chip-maker moves: Key semiconductors, such as Sandisk, Micron, and Advanced Micro Devices, have migrated from full positions in the Russell 1000 Value Index to full allocations within the Russell 1000 Growth Index. While semiconductors have historically been viewed as traditional “industrial cyclicals,” they have been a strong beneficiary of AI infrastructure-related spend. As such, their performance, valuations, and growth-oriented tailwinds have driven this transition between benchmarks. Now one-third of the Russell 1000 Growth Index will be weighted toward semiconductors.
• Growth and value overlap: There is notable overlap in some of the largest companies between the Russell 1000 Value and Russell 1000 Growth indices. It is not uncommon to see some overlap. However, this year’s reconstitution showed 1) major shifts in style classifications and 2) growing cross-representation in indices for some of the largest companies, pointing to broadening outperformance of these stocks and also highlighting how important their positions within the overall AI ecosystem have been. For instance, Alphabet is moving from a split value and growth allocation in 2025 to a 100% growth position this year. Three names are moving deeper into the value benchmark. Apple and Microsoft are classified as 54% growth and 50% growth as part of this reconstitution, respectively, after both being 100% growth in 2025. Most notably, Amazon is classified as 8% growth and 92% value after being 73% growth in 2025.
• Small cap stocks’ “diplomas”: Stocks like Bloom Energy and Credo have graduated from the Russell 2000 to the Russell 1000 Index. Both stocks are connected to the AI power/data center buildout themes and have seen their respective stock prices appreciate significantly—to the tune of +200% for Bloom in YTD 2026 alone!—as well as their market caps (e.g., Bloom went from a $5 billion market cap to an $80 billion market cap within a year’s time).

Mid Cap

Concentration isn’t just a predominant issue for large cap, but for mid cap as well—especially mid cap growth. Key characteristics of the reconstitution that continue to re-enforce this concentration issue include:

• Value/growth split in Russell Mid Cap index: Of the 800+ names in this index, 80%+ have an allocation within the Russell Mid Cap Value index. This gap in style representation within the index highlights the concentration of benchmark ideas for mid cap growth investors.
• Increase in the Information Technology weight within the Mid Cap Growth index: The nearly 1,200 basis points increase due to the inclusion of new names leads the sector to a 30% weight (and largest weight) in the index. It should be noted that the majority of these additions are a combination of technology hardware & equipment, semiconductors & semiconductor equipment, and software & services.

Small/Smid Cap

For small caps, we see a big changeover in composition, which is most reflected by big moves in sector allocation. Most notably, for the Russell 2000 and Russell 2000 Growth, Industrials drops by over 400 bps and 600 bps, respectively (and similarly, for the Russell 2000 Value, Information Technology drops by over 400 bps). The decreases in these sectors’ weights in the benchmarks are largely driven by the broad outperformance of stocks that are AI-adjacent (particularly around the infrastructure buildout) and their subsequent transitions from value to growth or graduations to larger cap indices. For instance, of the 61 new additions to the Russell 1000 Index, 42 are from the Russell 2000 Index—a staggering 70%!

Other noteworthy sector allocation changes include: 1) In the Russell 2000 Growth Index, Health Care experiences a 400+ bps increase, amounting to a 25% weight in the benchmark; the majority are biopharma names, and 2) in the Russell 2000 Value Index, Financials gains another 200 bps, solidifying its top spot in the benchmark.

Summary for Institutional Investors

The changes bring up a number of considerations when assessing managers’ portfolio construction approaches and subsequent portfolio positioning. The most notable is around benchmark-relative ownership. As we’ve seen in a market environment that has been led by one theme (and, more recently, factors like momentum and beta), the degree of relative performance can hinge on active stock selection in just a handful of stocks and themes, thereby overshadowing the benefits of portfolio diversification. Because of this, out-of-benchmark ownership and non-ownership of (larger) benchmark names should be evaluated when assessing total portfolio risk and attribution as well as factor exposures. Examples include:

• Ownership of semiconductors/memory stocks: These stocks have been clearly important to large cap manager performance because of their role in the AI ecosystem. However, they have typically been viewed as a commodity/cyclical opportunity. If secular trends like AI lengthen the cycle around these stocks and positively impact performance outcomes, managers (particularly growth) will need to weigh this against their historical view of the space when determining weighting of these stocks. Also, since semiconductors represents 30% of the Russell 1000 Growth benchmark, managers and institutional investors may need to re-evaluate guidelines around sector diversification to ensure that they are within range. For large cap value managers that have owned semiconductor stocks and desire to continue owning them, they will need to weigh how much out-of-benchmark exposure they’re willing to have now that these stocks will be in the growth benchmark.
• Ownership of historically growth names that have entered the value index: For value managers, there will need to be an evaluation of active bets with growth names at sizable weights in the value index, especially if there are zero weights expressed in a scenario in which these stocks continue to perform well.
• Relative weightings to the biotech/biopharma sub-sectors of Health Care: Many active small cap managers express a strategic underweight to biotech/biopharma stocks due to discomfort with the volatility often associated with these stocks and/or the lack of in-house expertise to discern the often binary nature of opportunities within the space. In periods where biotech/biopharma have done well, underweights to the space have been a source of negative alpha for managers positioned this way. With the majority of Health Care additions being biopharma stocks this year, managers will need to continue evaluating how they want to be positioned here, especially if the sub-sector shows the same strength that we observed at the end of 2025.
• Distribution of factor exposures: 3Q25 (and subsequent quarters since) reminded us of the importance of understanding factor exposures, like quality, when evaluating attribution challenges. The continued outperformance of AI-related stocks has been correlated with the rise in momentum and beta. Because of this, gaps in exposure to the AI theme and these factors have underpinned active management challenges; it is thus a worthwhile exercise to understand these gaps when underwriting a manager’s philosophy in investing in these market environments, implementation approach, and outcomes.

FTSE Russell will formally implement a semi-annual reconstitution this calendar year, which will take place after the close of the second Friday in December 2026. FTSE Russell has shifted from a once-a-year to a twice-a-year rebalancing schedule to reduce the lag between changes in company size and style characteristics, and to ensure that the indices are best reflective of the U.S. equity market. Unlike the June reconstitution, the December reconstitution will focus on market cap membership changes and additions and deletions of individual companies; style re-assessments will not take place during this reconstitution if a stock remains in the same parent index.