Russell Reconstitution

A: FTSE Russell believes indexes are designed to represent the entire investable opportunity set. Because markets continually change, there must be a systematic procedure in place to keep the indexes’ representation of the markets or market segments reflective of new market information. Fully reconstituting the indexes annually plus adding eligible IPOs (initial public offerings) quarterly and applying daily adjustments maintains the representative nature of the Russell US indexes while avoiding the unnecessary turnover a more frequent full reconstitution could cause.

A: Maintaining representative indexes must be weighed against the cons associated with making frequent changes to index constituents. In other words, an index must balance the precision of representation with practical and acceptable levels of turnover.

Russell research and Russell client sentiment has supported the annual rebalance schedule, as it strikes a reasonable balance between accurate representation and cost. We originally reconstituted the indices quarterly, then semi-annually. Our extensive research demonstrated that annual reconstitution of the Russell US Indices accurately represents the broad market and the market capitalization segments while minimizing the turnover required to reflect market changes. 

*FTSE client sentiment supports the implementation of semi-annual rebalances for the FTSE Global Equity Index Series (FTSE GEIS). FTSE Russell will continue to engage with clients via consultations to determine if changes to either methodology are necessary. There are no current plans to change the current rebalance process for either series.

A: The 2023 reconstitution of the Russell US indexes occurred on June 23. Beginning on May 19, preliminary lists were communicated to the marketplace and updates were provided on May 26, June 2, June 9, June 16 and June 23.

A: On rank day in April (this year April 28), all eligible US securities are ranked by their total market capitalization. Companies whose stocks are listed on eligible stock exchanges and who pass investability rules are considered for inclusion in the indexes. Beginning on May 19, preliminary lists of additions and deletions to the indices were communicated to the marketplace. These changes went into effect after the close on Friday, June 23.

A: At the June 2022 reconstitution, $79.3 billion and $63.8 billion in US stocks traded in the closing moments of Friday trading on the New York Stock Exchange (NYSE) and Nasdaq exchanges, respectively.

A: View FTSE Russell's complete Russell US Index construction and methodology document for more information.