Russell Reconstitution Takeaways

Russell just pulled off their annual index reconstitutions on Friday, some takeaways from their own analysis that are fairly reflective of market conditions:

• At 17.1%, Technology became the largest sector in the Russell 1000 Index at rebalance, overtaking Financial Services at 16.7%.  This was partially due to the inclusion of Facebook, the largest addition to the Russell Indexes globally, to the Technology sector of the Russell 1000 Index.

• Technology also led U.S. small caps in the biggest increase year-over-year, as 37 Technology companies joined the Russell 2000 Index.  Financial Services continues to be the largest sector in the Russell 2000 Index, even though 17 Financial Services stocks graduated to the U.S. large-cap Russell 1000 Index.

• Malaysia, China and Hong Kong showed the largest percentage increase in country weight within the Russell Global Index since last year’s reconstitution.  China remains the world’s third largest country in terms of total market capitalization behind the U.S. and Japan.  And emerging markets declined materially against developed markets over the past year, decreasing their Russell Global Index weighting from 14.7% to 13.7%.

• Global market capitalization, as reflected in the post-reconstitution Russell Global Index, had a notable decline, decreasing from $52.2 trillion on May 31, 2011 to $44.2 trillion on May 31, 2012.  U.S. market cap, as illustrated by the Russell 3000 Index, declined from $16.7 trillion to $15.8 trillion during this same period.

Source:

Russell Investments