DEFINITION of Russell 1000 Index
The Russell 1000 Index is an index of approximately 1,000 of the largest companies in the U.S. equity market. The Russell 1000 is a subset of the Russell 3000 Index. It represents the top companies by market capitalization. The Russell 1000 typically comprises approximately 90% of the total market capitalization of all listed U.S. stocks. It is considered a bellwether index for large-cap investing.
BREAKING DOWN 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. (See also Investment Fundamentals: S&P 500 Index vs. Russell 1000 Index.) 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.
Methodology and Construction
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 by FTSE Russell monthly. As of October 31, 2017, the Russell 1000 had 979 holdings. The average market cap was $174.2 billion. The largest company by market cap was Apple (AAPL) at $881.3 billion. Year-to-date through October 2017, the Russell 1000 had a return of 16.8%, outperforming the Russell 3,000’s return of 16.4%.
Investing in the Russell 1000 Index
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 November 17, 2017 were $19.3 billion. The ETF trades on the New York Stock Exchange (NYSE) with average daily trading volume of 831,200 shares. As of November 17, 2017, IWB was trading at $143.63 with a year-to-date return of 15.4%.
FTSE Russell also offers a number of index variations derived from the Russell 1000. 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 Russell 1000 Growth ETF (IWD)
IWF has an expense ratio of 0.20%. Assets under management as of November 17, 2017 were $39.1 billion. The ETF trades on the New York Stock Exchange with average daily trading volume of 1.25 million shares. As of November 17, 2017, IWF was trading at $130.96 with a year-to-date return of 24.84%.
iShares Russell 1000 Value ETF (IWD)
IWD has an expense ratio of 0.20%. Assets under management as of November 17, 2017 were $38.3 billion. The ETF trades on the New York Stock Exchange with average daily trading volume of 1.3 million shares. As of November 17, IWD was trading at $119.30 with a year-to-date return of 6.49%.