According to Russell, the newly rebalanced indexes reflect a noticeable shift away from technology stocks, with nearly half (42%) of the 291 companies deleted from the Russell 3000 in technology-related sectors. About a third of all deleted companies were based in California.
Russell 3000 Recap
The market capitalization of the median company in the Russell 3000 decreased 7.5%, from $791.1 million in 2000 to $731.8 million this year. A year ago the median surged 13% when the indexes were rebalanced.
The largest company in the Russell 3000 is the $486.7 billion market capitalization of General Electric, while the smallest is Finova Group’s $146.8 million. A year ago, General Electric’s $520.2 billion topped the list, while Independent Bank Corp.’s $177.9 million was at the other extreme.
This year, only 130 of the companies moving into the Russell 3000 were IPOs, representing 5.1% of total index capitalization, while last year some 320 IPOs were added to the Russell 3000.
Small Cap Recap
The Russell 2000, made up of the smallest 2,000 companies in the Russell 3000, ranges from a ceiling of the $1.4 billion New York Community Bancorp to Finova Group. The Russell 2000 added 108 IPOs to its ranks this year, 4.5% of its total capitalization. That represents a real tumble from last year’s 250 IPO additions, which were 13.7% of the small cap market.
The capitalization of the median company in the Russell 2000 decreased 12% from the same point in 2000, from $466.1 million to $410.3 million.
The total market capitalization for the Russell 2000 is $1,060 billion, representing 7.7% of the Russell 3000. The Russell 1000’s total market capitalization is $12,730 billion.
Each year Russell constructs its indexes by ranking the 3,000 largest stocks in the U.S. equity market by capitalization as of May 31. Russell indexes are rebalanced annually using objective criteria, primarily market capitalization.
Russell’s index methodology excludes limited partnerships, limited liability companies, royalty trusts, closed-ended investment management companies, ADRs, preferred stock, convertible preferred stock, participating preferred stock, pink-slipped companies, OTC bulletin board companies, and warrants and rights. Stocks trading below $1 at rebalancing are not included. Real estate investment trusts and IPOs are eligible for inclusion.