Russell Wraps Up 2003 Reconstitution

July 9, 2003 ( - Russell has completed the annual reconstitution of its 21 unmanaged US stock indexes, in a shift that saw an 11% decline in the market capitalization of the Russell 1000, 2000, and 3000 indexes.

The updated capitalization range for stocks in the Russell 3000 stretches from $286.8 billion for the largest stock (General Electric) to $116.6 million for the smallest stock (Verso Technologies Inc.).   The largest stock in the index decreased 7% from 2002 and 40% from 2001. The market capitalization of the median company in the Russell 3000, which now stands at $622.3 million, decreased 11% from $699.6 million in 2002.

Russell indexes are reconstituted annually.   That process takes the 3,000 largest US stocks as of the end of May and ranks them by total market capitalization.   The largest 1,000 firms in the resulting Russell 3000 become the Russell 1000, while the remaining companies become the Russell 2000.

Small Cap Standings

The Russell 2000 now ranges from a ceiling of $1.2 billion (21st Century Insurance Group) to a bottom end of $116.6 million (the aforementioned Verso Technologies Inc.) The capitalization of the median company in the small-cap benchmark, which now stands at $351.8 million, decreased 11% from the same point last year.

The total market capitalization for the Russell 3000 stands at $10.1 trillion, which reflects a 10.8% decline from the previous year, while the market capitalization for the Russell 2000 is $712.7 billion.   The latter figure represents 7.6% of the overall U.S. equity market as measured by the Russell 3000. Total market capitalization for the Russell 1000 is $9.37 trillion, which reflects a 9% decline for the year.

IPO Additions

Of the 289 additions to the indexes, only 28 resulted from initial public offerings (IPOs) during the year, and just 6 gained enough value to jump directly into the large-cap Russell 1000 Index.   The 22 newly added IPOs in the Russell 2000 represent only 0.1% of its total market capitalization, according to Russell, which noted that the number of IPOs in the small-cap index fell from 50 last year and was dramatically lower than the 250 IPO additions in 2000, which at the time represented 13.7% of the index’s weight.

Among the new faces in the Russell 3000 are 72 banks, 17 biotechnology firms, and 10 real estate investment trusts/real estate development companies.

The new membership lists are at