(Finance) – FTSE Russellindex manager that belongs to the London Stock Exchange Groupannounced that the reconstitution of its family of US indices will go from an annual event to a semi-annual frequency.
The Russell US indices are designed to objectively represent the US stock market, based on market capitalization and component style. Currently, the Russell US indices, including the indices Russell 1000, Russell 2000 and Russell 3000which reflect the largest 1000, 2000 and 3000 companies, are reconstituted annually in June.
“While the annual replenishment ensures an accurate representation at a single point in time, market conditions and valuations continually change,” he said Catherine Yoshimoto, Director, Product Management at FTSE Russell – This leads to an inevitable drift over time in the characteristics of individual stocks and the market as a whole. How we balance the Russell US indices’ joint objectives of maintaining representativeness and limiting turnover may also need to change.”
“THE recent periods of increased market volatility and dispersioncoupled with a strong expansion of assets indexed to Russell US indices, have highlighted the need for a more regular and responsive approach to index reconstitution,” he added.
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