For many people June means getting out of school for summer break, warmer weather, and vacations. For me it means Russell Reconstitution time. For those of you unfamiliar with the Russell Reconstitution process I’ll explain a little more –
Every year on the last day of June the components for all the Russell Indexes are updated based on market cap. The highest profile index is the Russell 2000 which is considered a small cap benchmark. The Russell 2000 is determined by taking the 3000 largest companies in the US by market capitalization then lopping off the top 1000 companies by size. The bottom 2/3rds of this list end up being the Russell 2000. There are several funds and investment products that base performance on the Russell 2000. With changes in the components of the index comes rebalancing by these funds.
This year, the first step in the process occurs this coming Friday the 13th when the preliminary additions and deletions from the Russell indexes will be publish in the afternoon. The following Friday there may be some small updates to the list of additions and deletions released by Russell Investments. Then on the 27th the final reconstitution list will be made public after the markets close. Finally the new membership lists for many of the Russell Indexes will be posted on June 30th.
For more information on the particulars around the reconstitution process visit www.russell.com.