Russell Posts Preliminary Lists of Global / U.S. Index Additions as Part of Annual Reconstitution Process

Technology shows biggest increase among U.S. sectors as Facebook joins and Apple ascends to the top spot in the Russell 3000® Index

SEATTLE--(BUSINESS WIRE)-- Russell Investments has posted its official lists of companies set to join or leave the U.S. broad-market Russell 3000® Index and Russell Microcap® Index when its industry-leading institutional U.S. equity indexes are fully reconstituted on June 22. These lists of U.S. companies—and lists of additions and deletions for the Russell Global Index—are available at the Russell reconstitution website.

Key measures of market size are lower this year due to market performance over the past year. The combined capitalization of stocks in the Russell 3000, which reflects about 98% of the investable U.S. equity universe, will decrease from $16.7 trillion at May 31, 2011 to $15.8 trillion as of May 31, 2012. Similarly, the median market capitalization will decrease from $1.04 billion to $910 million.

The list of preliminary additions for the Russell 3000 Index features 197 companies, including 39 initial public offers (IPOs). Financial Services leads the list with 62 total additions. And while Financial Services is expected to remain the top sector in the Russell 3000 Index at 17.1%, Technology has increased the most in the last year and will comprise 17.0% of the newly reconstituted Index.

Among IPO additions to the Russell 3000 are software maker Splunk Inc. and financial services provider EverBank Financial Corp. In addition, research from Russell Indexes shows that Apple ($540.2 billion) is expected to replace ExxonMobil ($367.7 billion) as the largest company in the Russell 3000 in terms of market capitalization. Apple grew its market capitalization by 68% in the last year. On the preliminary list, the largest addition to the Russell 3000 by market capitalization is Facebook, which had its IPO in May.

“Russell's index reconstitution reflects the market decline over the past year. That said, returns have been far from uniform,” said Steve Wood, chief market strategist for North America at Russell Investments. “Even as the flare-up in the Eurozone crisis, China’s slowdown and relatively soft U.S. economic data have weighed on investor sentiment in recent weeks, the global markets showed resilience when viewed over the course of a year. Furthermore, Russell Indexes reflected diverse returns and decreased correlations across global markets in the last year, reinforcing the importance of a well-diversified global multi-asset portfolio approach.”

For the Russell Global Index, which includes approximately 10,000 securities in 47 countries covering 98% of the investable global market, combined market capitalization will decrease from $52.2 trillion on May 31, 2011 to $44.2 trillion as of May 31, 2012 and median market capitalization will decrease from $1.09 billion in 2011 to $908 million. A total of 774 companies will be added, including 141 in Japan alone, while the Financial Services sector will lead the list of global additions, with 175 financial stocks set to the Russell Global Index.

Throughout its nearly 30-year history of index construction Russell has drawn on its unique insight into global capital markets and multi-asset portfolio construction and implementation to design benchmarks offering exposure to the true performance of different segments and asset classes of the market. This insight has helped the Russell Indexes methodology remain an industry standard for three decades.

“A routinely scheduled reconstitution is a key feature of truly representative and objective benchmarks,” said Rolf Agather, global head of index research and innovation at Russell. “Russell's unique process helps prevent capitalization drift, making the indexes a highly accurate representation of current market realities. The annual reconstitution draws on objective and transparent rules to help Russell and investors stay abreast of the market to better measure asset class performance, identify opportunities and invest for the long term.”

The preliminary lists of additions and deletions represent the first public step in Russell's annual reconstitution process. Any updates to the lists will be posted June 15 and 22. The final membership lists, which will include the Russell 1000® Index and the Russell 2000® Index, will be posted June 25. Accurate benchmarks are an integral part of Russell's ongoing process to monitor investment manager products worldwide.

About Russell Investments

Russell Investments (Russell) is a global asset manager and one of only a few firms that offer actively managed multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell’s core capabilities extend across capital markets insights, manager research, Indexes, portfolio implementation and portfolio construction.

Russell has about $155 billion in assets under management (as of 3/31/2012) and works with 2,400 institutional clients, more than 580 independent distribution partners and advisors, and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 12/31/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.5 trillion in 2011 through its implementation services business. Russell calculates more than 80,000 benchmarks daily covering approximately 98% of the investable market globally, 83 countries and more than 10,000 securities. Approximately $3.9 trillion in assets are benchmarked to the Russell Indexes.

Russell is headquartered in Seattle, Washington, USA, Russell has offices around the world including Amsterdam, Auckland, Beijing, Chicago, Frankfurt, London, Melbourne, Milan, New York, Paris, San Francisco, Seoul, <location value="LC/sg" idsrc="xmltag.org">Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow us @Russell_News.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.Russell Investments is the owner of the trademarks, service marks and copyrights related to its respective indexes.Russell’s indexes are unmanaged and cannot be invested in directly.

Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

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For Russell InvestmentsAdam Grodman, 212-909-4781
[email protected]
orTim Benedict, 212-702-7823
[email protected]

Source: Russell Investments