Catherine Yoshimoto
On the heels of this year’s reconstitution of the Russell US Indexes, we share key takeaways:
1. The Russell recon follows a well-orchestrated timeline
The Russell US Indexes are designed to reflect the ever-changing US equity market, and annual reconstitution is critical to maintaining accurate representation. The recon process involves redefining the breakpoints between large, mid, and small cap to ensure the previous year’s market changes are captured. We also reevaluate companies to determine where they lie along the investment styles spectrum.
The Russell recon process follows a well-orchestrated timeline that spans several weeks—giving market participants a transparent view into the key events leading up to recon day.
April was "ranking" month, when the largest US companies were lined up to form the preliminary Russell US reconstitution portfolio. In 2025, the rank day fell on April 30. May and June were transition months. Beginning on May 23, we communicated the preliminary lists to the marketplace and provided updates on May 30, June 6, June 13, and June 20. The newly reconstituted indexes took effect after US market close on June 27.
Russell US Indexes moving to a semi-annual index reconstitution frequency
Following market consultation, FTSE Russell has announced the reconstitution of the Russell US Indexes will change from an annual to a semi-annual schedule in 2026. Rebalancing will continue to take place on the fourth Friday in June, with the additional implementation date of the second Friday in November.
Please visit our Russell recon page for the latest information and updates.
2. Pricing pressure logic doesn’t apply on recon day
Recon day typically concludes as one of the highest trading volume days of the year. 2025 was no exception: Markets closed on June 27 with a record $102.5 billion traded on the Nasdaq and $114.7 billion traded on the NYSE.
The heightened trading volume on recon day leaves many investors wondering about the impact on stock prices—and whether the recon puts upward pricing pressure on additions to the indexes and downward pressure on deletions. However, short-term impacts of the Russell recon on constituent stock prices haven’t reliably followed this pattern.
The reason this pricing pressure logic doesn’t apply on recon day is we’ve designed the process to give investors considerable lead time before the actual index reconstitution takes place. Per the timeline above, this year our “rank day”—when we rank the eligible companies to form the preliminary recon portfolio—takes place on April 30, a full eight weeks before recon day. And beginning May 23 and into June, concluding on June 27 recon day, we communicated updates on the preliminary changes to the newly reconstituted Russell Indexes.
As a result of this advanced notice, traders get ahead of additions and deletions, and by the time the actual recon day arrives the impact is typically already priced into the stocks. In fact, at times trading in anticipation of the recon date goes too far—where adds are overbought and deletes are oversold. In these cases, actual recon day trades go in the opposite direction, with additions declining and deletions rallying.
Furthermore, methodology enhancements made over the years have reduced the impact of reconstitution—for example, the adoption of the Nasdaq closing cross on recon day to reflect enhanced efficiency of closing auction prices. A total of 2.5 billion shares were executed in the Nasdaq closing cross on recon day this year, executed in 0.878 seconds accross Nasdaq-listed securities during recon[1].
For liquidity and hedging risk, some market participants turn to derivatives. Recon day trading volumes tend to be higher than the June daily average volume across CME Group’s E-mini Russell futures (RTY) and Micro E-mini Russell 2000 Index futures (M2K) as well as Cboe Russell 2000 Index options (RUT).
3. It’s an occasion to reflect on the year behind us
Our annual Russell recon isn’t only a time to reshuffle our indexes to reflect the present-day US equity market—it’s also a chance to reflect on the evolving narrative. Each year, a distinct market story takes shape when we examine Russell Index performance.
At the time of the 2024 recon, the standout theme had been the outperformance of large caps versus small caps, fueled primarily by the Technology industry and the dominance of the Magnificent Seven.
Leading up to the 2025 recon, the market followed a different arc. After peaking in February 2025, US equities sold off sharply in response to the newly elected Trump administration’s “Liberation Day” announcement of sweeping import tariffs. By mid-May, the Russell 3000 Index recovered most of its losses in response to a softening of the proposed tariff rates.
A look at market cycles since 2000 highlights how the recent tariff-driven volatility compares to past macro-driven selloffs. In our analysis, we define a cycle as an index move of more than 15% in either direction: an increase of more than 15% from the most recent trough (in the case of a bull cycle); or a decrease of more than 15% from the most recent peak (in the case of a bear cycle).
As the chart below shows, there were five bull cycles and five bear cycles of varying durations and amplitudes between end-February 2000 and end-June 2025. So far, the 2025 “tariff tantrum” doesn’t merit the label of a new bear cycle, and in fact market regained its footing post-April. Tariff uncertainty lingers but has yet to leave a lasting mark on long-term market trends.
US equity market cycles since February 2000
Source: FTSE Russell, data as of June 30, 2025. Past performance is not a guarantee of future results. See the end for important disclosures.
Postscript
A recon-related question we often receive is how a company can join the Russell indexes. We’ve highlighted the most relevant index rules for prospective joiners in a separate insight.
Disclaimer
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