DEFINITION of 'Russell Small Cap Completeness Index'

The Russell Small Cap Completeness Index is a market-capitalization-weighted-index comprised of Russell 3000 stocks not included in the Standard & Poor's 500 Index. Constructing it in this way provides investors with a broad basket of small and mid cap assets that are uncorrelated to widely owned stocks like Apple (AAPL) and Amazon (AMZN). Each year, the FTSE Russell reconstitutes the index to remove companies recently eligible for the S&P 500. This ensures the index remains uncorrelated to the broader market and helps minimize losses in the event of a downturn.

BREAKING DOWN 'Russell Small Cap Completeness Index'

The Russell Small Cap Completeness Index ranges in size; the largest company holds a market cap of about $54 billion while the average company stands at $6.5 billion. A significant portion of the holdings operate in financial services, consumer discretionary and technology sectors. And unlike most other indexes, a large portion of price movement is determined by each sector. In fact, some the top holdings include Tesla (TSLA), Las Vegas Sands (LVS), and T-Mobile (TMUS), each of which does business outside of the tech sector. 

Adding the Russell Small Cap Completeness Index to a portfolio requires purchasing an exchanged-traded-fund (ETF). The most popular ETF is the SPDR Russell Small Cap Completeness ETF (RSCO), which launched in November 2005. As of October 2017, the index outperformed the Russell 3000 over a 3 month, 12 month, and 10 year time frame. Year to date shares have jumped 14.5% but lag the benchmark index. 

Advantages of the 'Russell Small Cap Completeness Index'

The benefits of investing in assets uncorrelated to the broader market can't go understated. It offers investors more diversification and a means to protect against downside risk. Constructing a portfolio with uncorrelated assets also allows the movement of one asset to partially offset a decline in another, thereby reducing the average volatility of a portfolio. This is a fundamental method to reduce large variations between companies, otherwise known as unsystematic or diversification risk. Sometimes buying uncorrelated assets doesn't result in a winning situation. In the event of a systemic crisis, comparable with the recent recession, most assets are exposed to a large amount of volatility. 

Another advantage of this approach includes an opportunity to capture returns from outperforming assets and reinvest the profits in the underperformers. The Russell Small Cap Completeness Index and other assets like it serve as a reminder that uncorrelated returns can protect a portfolio when large cap stocks tumble. 

RELATED TERMS
  1. Russell 1000 Index

    The Russell 1000 Index is an index of approximately 1,000 of ...
  2. Russell Midcap Index

    The Russell Midcap Index is a market capitalization weighted ...
  3. Russell 3000 Growth Index

    The Russell 3000 Growth Index is a market capitalization weighted ...
  4. Russell 3000 Index

    The Russell 3000 Index is a market-capitalization-weighted equity ...
  5. Russell Top 50 Index

    The Russell Top 50 Index is a market capitalization weighted ...
  6. Russell Microcap Index

    The Russell Microcap Index is an index of almost 1,550 small ...
Related Articles
  1. Insights

    Investment Fundamentals: S&P 500 Index Vs. Russell 1000 Index

    Learn about the similarities and differences between the S&P 500 and the Russell 1000 indices, and discover why investors may choose one over the other.
  2. Investing

    A Surprise Among Small-Cap ETFs

    Small-cap ETFs are disappointing this year, but that is not true of this growth ETF.
  3. Investing

    Russell Rebalance Study: What You Need to Know

    Analyze the recent stock performance for different types of stocks to determine which equities could gain or benefit ahead of Russell index reconstitution.
  4. Investing

    S&P 500 Vs. Russell 2000 ETF: Which Should You Get?

    We look at the differences of investing in a S&P 500 vs. the Russell 2000 exchange-traded fund, and when to choose the one over the other.
  5. Investing

    Small Caps: Rising Rates Not All Bad News

    Small-cap stocks can be surprisingly durable in the face of higher interest rates.
  6. Investing

    Key Factors Of The Russell 2000 Index

    The Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.
  7. Investing

    Why Small Cap Stocks Are Poised for Major Gains

    The Russell 2000 small cap stock index may outperform this year after rising nearly 20% in 2016
  8. Investing

    The Top 3 ETFs For Investing in the Russell 200 Index (IWL, IWY)

    Learn about three ETFs that track the Russell Top 200 Index and how these ETFs have a very high correlation with the S&P 500 index.
  9. Investing

    IWM: iShares Russell 2000 Index ETF

    Find out more about the iShares Russell 2000 exchange-traded fund, or ETF, the characteristics of this ETF and its suitability for investing.
  10. Investing

    Why Trump's Small Cap Rally Is Flaming Out

    Small caps badly lag the market on concerns about delays in Trump's economic plans
RELATED FAQS
  1. Is there an index for tracking mid-cap stocks?

    Learn the specifics about indexes available for tracking companies with market capitalizations in the medium-sized, small ... Read Answer >>
  2. How do indexes determine which stocks are removed or added to them?

    Stock indexes are formed based on the kinds of stocks or financial securities they want to track. For example, the Standard ... Read Answer >>
  3. What are the pros and cons of using the S&P 500 as a benchmark?

    Learn about the advantages and disadvantages of using the S&P 500 as a benchmark for portfolio performance, and understand ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center