Russell 3000 is a market index that tracks the top 3,000 public enterprises, weighted by market capitalization, in the US. The index provides a comprehensive view of these companies that account for 98 per cent of all the listed incorporated firms in the country.
Founded in January 1984, the Russell 3000 covers a broad range of financial products, including Russell 1000 (large-cap) and Russell 2000 (small-cap). It provides an unbiased, comprehensive, and stable barometer of the market. The Index is reconstituted annually to ensure a growing and new companies can become part of it.
The FTSE Russell Group, wholly owned by the London Stock Exchange Group, owns and operates the Russell 3000. The FTSE Russell is a global provider of analytics, benchmarks, and data solutions with multiple capabilities. The FTSE Russell also manages the Russell 1000 as well as the Russell 2000.
The characteristic and performance of the Russell 3000 are shared by the FTSE Russell Group monthly. For instance, as of May 31, 2021, the Russell 3000 has 3,057 holdings with an average market capitalization of US$ 415.968 billion and the largest stock by market capitalization of US$ 2,091.965 billion.
The Russell 3000 have divided the market into segments as per the Industry Classification Benchmark. The technology segment holds a significant share in the Russell 3000, followed by industrials and consumer discretionary. As of May 31, 2021, the top ten companies under Russell 3000 are:
Frequently Asked Questions (FAQs)
The Russell 3000 represents the top 3,000 companies incorporated in the United States and provides an unbiased exposure to the US equity market. Rank date (in May) is when FTSE Russell announces the list of top 3,000 companies who made it into the index. The selected companies are graded based on their market cap on the rank date. However, in actual they are reconstituted into the index on the last Friday of June.
To be included in the Russell 3000, companies must meet specific eligibility requirements. The requirements include a US$ 1 share price on the rank day, the minimum market capitalization of US$ 30 million, and five per cent of the outstanding shares are available in the stock market to trade. Any US incorporated company with a small portion of its outstanding shares in the stock market is not eligible for inclusion. In addition, initial public offerings (IPOs) taking place between the two reconstitutions are included quarterly in the index post meeting the requirements.
Individual investors participate in the Russell 3000 to gain exposure to top 3,000 companies, accounting for 98 per cent of the US equity market.
Some critics note that the Russell 3000 index’s performance lines up with the S&P 500 and does not provide meaningful exposure to smaller companies. Also, it is believed that Russell 3000 overweighs selected sectors.
Advantages of investing in Russell 3000 are:
Disadvantages of investing in Russell 3000 are:
The Russell 3000 provides a true picture of the US equity market through: