Investing March 27, 2002

Record Activity for Passive Benchmarks

March 27, 2002 (PLANSPONSOR.com) - Plan sponsors and participants may have fed a growing interest in passive benchmarks last year, resulting in a record year for Frank Russell's indexes.
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Last year, passive investments in index funds benched to Frank Russell Company’s 21 US indices surged to a record $214 billion, according to the company.  This continues an upward trend from $116 billion in 1999 and $176 billion in 2000.

Funds benched to the Russell 3000 Index make up the lion’s share of this increase, with some $95 billion in passive funds measured against this index, which covers about 98% of the US equity market, but also excludes the bottom 2% of the market where many very small stocks remain illiquid and often unstable.

Other Russell indexes, all of which are components of the Russell 3000, offer targeted coverage in terms of style, these include:

  • the large-cap Russell 1000 Index, which now is the model for $39 billion in passive funds, and 
  • the Russell 1000 Value Index, which is the basis for $31 billion in index funds

Russell originally developed its indices as tools to help investors, including plan sponsors to assess the performance of active investment managers and to assemble a total portfolio reflective of a particular market segment based on capitalization.
 

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