Friday, June 26th is fast approaching – do you know where your company ranks on the Russell indices?
Russell began announcing preliminary updates to its Russell Global Index®, Russell 3000® and Russell Microcap® indices on June 12th. The rebalance of the Russell Investments indices will be finalized on June 26th.
Index funds that track the performance of the Russell 3000 will buy or sell stocks at the close on June 26th based on additions, deletions and weighting changes within the Russell 3000 and its components. “Russell Rebalance Day” is often one of the busiest trading days in the equity markets and a day when stocks added or deleted to the Russell indices often see elevated trading volume.
Companies began distributing news releases announcing their addition or deletion from the Russell indices starting at market close on Friday, June 12th, when preliminary additions and deletions were announced.
Issuing a news release stating that your company has received preliminary indication that it will be included in one of the Russell indices can build interest in your stock with investors who track such indices, especially before the final index is published. If your stock has been building in valuation and your company is executing, the release can underscore these positive developments in a credible manner.
Such a release might quote management, saying “We aim to be a leader in our U.S. market and during the past year we have grown sales by XX% and earnings by YY%. Our addition to the Russell Index reflects the market’s growing recognition of our company and will help enhance awareness of our progress and opportunities in the investment community.”
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies, according to Russell Investments. Membership in its indices is determined by a ranking of all listed companies by market cap yearly at the end of May, during each annual reconstitution period.
Top 3,000 stocks = Russell 3000 Index
Largest 1,000 stocks = Russell 1000 Index
Next 2,000 stocks = Russell 2000 Index
Smallest 1,000 in Russell 2000 + next smallest 1,000 companies = Russell Microcap Index
Companies may be excluded or deleted from the Russell indices at the time of rebalance if the stock is trading below $1.00, are on the Pink Sheets or Bulletin Board, or if there are other adjustments for cross ownership and privately held shares. Closed-end mutual funds, limited partnerships, royalty trusts, foreign stocks, American Depositary Receipt (ADRs) and the like are also excluded from the Russell indices.
Final membership lists for all Russell indices are posted on Monday, June 29th, and can be found at www.russell.com.