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Russell 1000
Index Description
Russell 1000 Index
Fundamentals
The
Russell
1000 Index measures the performance of the 1,000 largest
companies in the Russell 3000 Index, which represents approximately
92% of the total market capitalization of the Russell 3000 Index. As
of the latest reconstitution, the average market capitalization was
approximately $13 billion; the median market capitalization was approximately
$3.8 billion. The smallest company in the index had an approximate market
capitalization of $1.4 billion.
A series of indexes
was developed jointly by the Frank
Russell Company and the New
York Futures Exchange (NYFE) to represent investment-grade equities.
While the S&P
500 represents approximately 75 percent of the investment-grade
stocks held by most institutional investors, the Russell 1000, 2000,
and 3000 indexes track almost 99 percent of the stocks included in portfolios
of institutional investors.
Small Cap Stocks Relate
to Russell Indexes
Even with more than 6,000 publicly traded U.S. stocks,
the Russell 3000 Index confines itself to the 3,000 most actively traded
shares and is divided into the Russell 1000 and Russell 2000 sub-indexes.
The
Russell
1000 Index represents the price
of the top tier of the domestic equity market, or companies with market
values greater than $300 million, which usually comprise approximately
90 percent of the market. The Russell 2000 Index represents the second
tier of U.S. equities, or companies with market values between $20 million
and $300 million, which account for approximately 8 to 9 percent of
the total market.
How the Russell 1000 Index
is Determined
The Russell 1000, 2000, and 3000 indexes are capitalization-weighted,
and adjustments are made for cross-ownership. For example, if IBM owns
20 percent of Intel, the index includes only 80 percent of Intel's outstanding
shares. Also, all three indexes exclude non-U.S. stocks, both ADRs and
the ordinary shares that are traded on U.S.
stock exchanges. The base level for all three indexes was set at
100 in 1979.
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