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Russell 3000 Index – Setting Investment Benchmarks

18 June 2008 - Markets - Editor

The preliminary annual Russell 3000 Index, released late Friday 13 June 2008, indicates that the market value of stocks incorporated in the renowned Russell Investments Index has dropped by approximately $2 trillion during the past year. This is seen as a reflection of the overall decline in the market and the slow-moving U.S. economy. The reconstituted Russell 3000 index reflects an additional 278 new companies, while 176 companies will be removed from the index due to a significant decline in their market value.

The release of the Russell 3000 Index is likely to trigger active trading in the stocks of the companies that have been added to the index, as well as those that have been removed, as investors, mutual fund managers and institutional investors move to bring their portfolios in line with the new index. About 21 percent of the new additions represent financial services stocks, while financial services stocks make up about 28 percent of the deletions, indicating dramatic movement within this sector. Notable new-comer to the Russell 3000 is TeleCommunication Systems, Inc. (TCS). As a provider of high-tech wireless communications technology, TCS, has achieved record revenues and profits in their first financial quarter, with every indication that, despite the sluggish U.S. economy, their growth is likely to continue.

Based primarily on total market capitalization, the Russell 3000 Index measures and lists the performance of the top 3000 companies in the United States. This is representative of about 98 percent of the viable U.S. equity market. The Russell 3000 Index is reconstituted annually to include new and growing equities, and exclude companies with a market value that has fallen too far, thereby providing a detailed and unbiased indicator of the current market. Russell indexes serve as benchmarks for investment strategies.

The Russell 3000 Index represents the U.S. component of the Russell Global Index, which was introduced last year. The Russell 3000 Index includes the Russell 1000 Index representing the top 1000 large-cap companies, and the Russell 2000 Index representing the top 2000 small-cap companies. There are other sub-categories within the Russell 3000, all of which are closely monitored by investors when making investment decisions.

Although the revised Russell 3000 Index, along with the Russell Global Index, Russell Micro-cap and Russell Mid-cap will only technically be finalized on 27 June to come into play at open of business on 30 June, there is not likely to be any change to the preliminary index. Russell Investments aims to provide strategic advice and up-to-date performance benchmarks as well as a range of superb investment products in order to improve financial security for investors. There are principal Russell Investment offices in Amsterdam, Johannesburg, Auckland, London, New York, Melbourne, Sidney, Paris, Seoul, San Francisco, Singapore, Tokyo and Toronto.

 


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