Frank Russell Rolls Out New Small-Cap Indexes

April 13, 2000 (PLANSPONSOR.com) - Frank Russell Company introduced three new equity indexes this week. The Tacoma, WA, investment management and advisory firm, said in a statement these new indexes target a broadly-defined small cap universe.

Beyond S&P 500

The company, known for its Russell 2000 and Russell 3000 indexes, said the indexes are designed to measure US stock market performance outside of the S&P 500 Index. Craig Ueland, Russell’s chief operating officer, said this will help investors diversify their holdings while minimizing asset overlap.

The new series consists of the Russell Small Cap Completeness Index and two offshoots. These all measure performance of stocks in the Russell 3000 index excluding companies represented in the large-cap S&P 500 Index. The Russell 3000 covers the 3,000 largest US companies based on total market capitalization.

If the index had been in existence, the average market capitalization of the Small Cap Completeness Index would have been $1.2 billion in June, 1999, when Russell last reconstituted its US indexes. The median market capitalization was $556.7 million.

Sticking to US

The two offshoots are:

  • the Russell Small Cap Completeness Growth Index, which measures stocks with higher price-to-book ratios and forecasted growth rates;
  • the Russell Small Cap Completeness Value Index, which tracks stocks with lower price-to-book ratios and lower forecasted growth rates, an asset class plagued by underperformance for some time.

Like all Russell indexes, the new ones are value-weighted and consist only of US domiciled company stocks.

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