What Is the Russell 1000 Index?
The Russell 1000 Index, a subset of the Russell 3000 Index, represents the 1000 top companies by market capitalization in the United States.
- The Russell 1000 Index, a subset of the Russell 3000 Index, represents the 1000 top companies by market capitalization in the United States.
- The Russell 1000 index comprises approximately 92% of the total market capitalization of all listed stocks in the U.S. equity market and is considered a bellwether index for large-cap investing.
- Performance and characteristics of the Russell 1000 Index are provided monthly by FTSE Russell.
Understanding the Russell 1000 Index
The Russell 1000 is a much broader index than the often quoted Dow Jones Industrial Average and Standard & Poor's 500 Index, although all three are considered large cap stock benchmarks. The Russell 1000 is managed by FTSE Russell. FTSE Russell also manages the Russell 3000 and Russell 2000 as well as numerous alternative indexes derived from each.
The Russell 1000 is a market capitalization-weighted index, meaning that the largest companies constitute the largest percentages in the Index and will affect performance more than the smallest Index members. The Russell 1000 components are reconstituted annually in May. However, newly listed stocks with initial public offerings are considered for inclusion quarterly.
To determine the holdings of the Russell 1000, FTSE Russell ranks all of the stocks included in the Russell 3000 by market capitalization and identifies the market cap breakpoint of the 1,000th stock ranking. This breakpoint is the primary market capitalization used to determine index eligibility. Many stocks are swapped between the Russell 1000 and Russell 2000 at the annual reconstitution however variation around the market cap breakpoint is the determining factor.
Performance and characteristics of the Russell 1000 Index are provided monthly by FTSE Russell. As of February 29, 2020, the Russell 1000 had 976 holdings and the average market cap was $264.64 billion. The median market cap was $9.95 billion and the company with the largest market capitalization was Microsoft (MSFT) at $1.24 trillion. Year-to-date through February 29, 2020, the Russell 1000 had a return of about -8.07%.
In March of 2020, FTSE Russell announced the 2020 schedule for the annual reconstitution, or rebalancing, of its Russell US Indexes. On June 15, 2020, the “lock-down” period began, when US index adds & delete lists are considered final. On June 26, the Russell Reconstitution becomes final after the close of the US equity markets. On June 29, equity markets open with the newly-reconstituted Russell US Indexes. The rebalance is expected to drive a record tilt towards larger companies over small, growth companies over value, and tech/healthcare over the other sectors.
Investing in the Russell 1000 Index
FTSE Russell also offers a number of index variations derived from the Russell 1000. These variations include: Russell 1000 Value, Russell 1000 Growth, Russell 1000 Defensive, Russell 1000 Dynamic, Russell 1000 Growth-Defensive, Russell 1000 Growth-Dynamic, Russell 1000 Value-Defensive and the Russell 1000 Value-Dynamic. iShares also offers a passively managed index ETF for the Russell 1000 Growth and Russell 1000 Value.
- iShares Russell 1000 Index ETF (IWB)
Many investors prefer the Russell 1000 for large cap portfolio exposure. The iShares Russell 1000 Index ETF (IWB) is one of the leading funds offering comprehensive investment in all of the Russell 1000 components. IWB is an index fund that seeks to match the holdings and return of the Russell 1000 Index. It has an expense ratio of 0.15%. Assets under management as of March 24, 2020 were $16.96 billion. The ETF trades on the New York Stock Exchange (NYSE) with average daily trading volume of 2,544,793 shares. As of March 24, 2020, IWB was trading at $134.66 with a year-to-date return of -24.56%.
- iShares Russell 1000 Value ETF (IWD)
IWD has an expense ratio of 0.19%. Assets under management as of March 24, 2020 were $28.77 billion. The ETF trades on the New York Stock Exchange with average daily trading volume of 4.8 million shares. As of March 24, 2020, IWD was trading at $93.96 with a year-to-date return of -31.2%.