In the world of finance or the stock market, an index is considered synonymous with a stock market indicator. The index is a model that defines and assesses the credibility and functioning of the stock market. Investors use this method to track the performance of assets and groups of companies in a systematic way. In other words, it is a subcategory of the stock market through which stockholders evaluate and track the current price levels with preceding prices to determine and calculate the market performance. The prices of highlighted stocks are weighed against and computed through a standardized process.
The financial market is built with numerous investing opportunities like shares, bonds, forex, ETFs and indexes, and much more. One such instrument is the Russell 3000 list of indexes. Are you also wondering what this index is, what companies are in the Russell 3000 index, etc.? Well, we have got you covered.
What is the Russell 3000 index?
The Russell 3000 Index represents an index comprised of the 3,000 largest U.S.-traded stocks created by FTSE Russell. Russell 3000 market-capitalization-weighted equity index currently represents 98% of the investable U.S. equity market.
The investors can purchase the index fund and participate in the stock market index, categorized as either a mutual friend or an exchange-traded fund. In a nutshell, a stock market index is a determinant or tool to analyze statistical performance and data changes materializing in the stock market. Consequently, a stock index displays and mirrors the market performance and trajectory of price movements of different assets and products in the financial or investment world. Indexes are the lenses of economic and financial perception that discuss and publicly display the marketing fluctuations in the stock market. Whether a company is performing up to the mark or dwindling in terms of financial procurement, all the vital information is accumulated through the concept of an index.
In the Russell 3000 companies list, all the publicly listed companies are given weightage according to their market cap. The index, as said, is a broader one and contains almost 98 percent of all stocks of the U.S share market.
Russell 3000 companies list was first time published in 1984, on 1st January. After that, it is being published every year by considering and adjusting the market capitalization changes. In addition to that, quarterly checks are also in place to see if any new companies are qualified to be included in the Russell 3000 list.
What companies are in the Russell 3000?
Russell 3000 list is presented on the ftserussell.com website. The list is updated, and you can download the Russell 3000 list here.
It is a financial index that helps track and analyze the performance of the U.S’s top 3000 companies that are traded publicly. The index is created and updated by a data solution & subsidiary institute of the London Stock Exchange Group called FTSE Russell.
Russell 3000 index list of companies include Microsoft, Facebook, Apple, Johnson & Johnson, Berkshire Hathaway, Amazon, Alphabet, and more.
If you compare Russell 3000 vs. S&P 500, the difference would be that Rusell captures the top and largest 3000 companies, whereas S&P 500 caters only to 500. As a result, in the S&P 500 vs. Russell 3000, Russell is said to be a broader index.
As we have described, the Russell index contains 98 percent of the total stocks listed on the U.S market, which are given weight according to their market cap. Looking at numbers, as of 31st March 2020, the market cap of Russell 3000 companies was around $244 billion. Doing the same timeframe, the top largest stock ruling the index with a whopping market capitalization of $1.2 trillion was Microsoft.
Russell 3000 index fund price
Current Russell 3000 returns are:
Live Russell 3000 chart is presented below:
What is the Russell 3000 Growth index?
Russell 3000 growth index represents a subset of the Russell 3000 index that includes companies displaying above-average growth signs. This market capitalization-weighted index is derived from Russell 3000 index and covers both large-cap and small-cap companies.
Investors and financial analysts use the concept of indexes to compare, contrast and evaluate the average weight of selected stocks and list them against different investments and assets. Investors are granted constructive investments to the stock market and financial capitalization as they use indexes. The Russell 3000 index is defined as a capitalization-oriented stock market index that FTSE Russell regulates. Russell 3000 index is the financial threshold and renowned index form for the entire US stock market. It includes 3000 assets and financial companies operating on a public scale in the United States of America. These companies display market capitalization and exhibit more than 98% of the American public equity market. Russell 3000 index was made accessible on January 1, 1984, and is currently maintained by FTSE Russell, a non-subsidiary of the London stock exchange club.
The top 10 holdings for Russell 3000 list include Apple, Microsoft car, Amazon, Facebook, Tesla, Alphabet Inc., Johnson and Johnson, Berkshire Hathaway, and JP Morgan Chase and Co. The categories evaluated by Russell 3000 index incorporates technology, consumer discretionary, industrial items, financial domains, healthcare services, real state facilities, telecommunication services, energy providers, and basic materials.
To understand the philosophy of the Russell 3000 index, the fundamental purpose and mission need to be evaluated first. It is the blueprint for more than the 3000 largest US-traded stocks. It serves as a foundation for various financial items and possessions, incorporating the Russell 1000 and Russell 2000 index. The thousand US-traded stocks are index interest of 3000 which further constitute Russell 1000, whereas Russell 2000 is a small-scale category or subset of 2000 components. Most American mutual and exchange funds take on a defensive role when the markets are full and glorified. However, Russell 3000 appears within the standard onset, does not take on a defensive role, and has a completely passive strategy. The available stocks within the rest of 3000 Index Corporation are re-handled on an annual basis especially on the last Friday of June. By this time, the flourishing companies and companies that experience loss is displayed in the index’s overall availability and are marked according to their current market portfolio and capitalization. The number of securities is expected to fluctuate on an annual basis. If the securities are modified, they will likely replace it at the preceding reconstitution scheduled for next year. The fluctuation occurs due to market performance, such as mergers, acquisitions, and private dealerships.
Russell 3000 vs. S&P 500
The difference between S&P 500 and Russell 3000 are:
- Russell has 3000 stocks while S&P 500 only 500 stocks
- S&P 500 has large-cap stocks while Russell 3000 has 1000 large and 2000 small-cap stocks.
- Russell 3000 companies are selected based solely on market capitalization
- Russell 3000 is the potentially high cost (many updates) for an investor to replicate this index.
Russell 3000 index is known to accommodate and welcome an assorted range of large-scale, mid-level, and small-cap stocks. As a result, most of the investors are attracted to investing in Russell 3000. most of the investors often overlooked the reality that scale companies rarely garner the returns and annual revenue. In contrast, the revenue gathered by the small or mid-level companies is mostly ignored. Because of this reason, the end cycle of the Russell 3000 displays a high correlation with the S&P 500 and only affects a particular portion by exhibiting its partial revenue and return. Investing in multiple funds and catering categories of all types, such as securities, technology, income instruments, and domestic stocks, will allow a portfolio to be extremely diverse.
The Russell US index incorporates large-scale microcap firms and is a pioneer in establishing benchmarks for institutional investors. Since it is known for its diversification and inculcation of many varied holdings, Russell 3000 is preferred over Wilshire 5000. The process of Russell 3000’s operation includes liquid stocks which are invested in the United States. This is a complete US-based investing concept and accommodated US-oriented firms and discourages the admittance of international firms. More than 98% of the total revenue of equity is treated and invested on US exchange, making this an extensive index.
Apart from analyzing the performance of companies, indexes are also used to measure and determine financial tools, economic insights, and data such as interest rates, inflation percentages, or manufacturing output. Regardless of their consumption, indexes are financial standards used to comprehend the portfolio’s return and performance in stock markets. Indexing is a popular investment strategy that acts similarly to an index passively rather than outperforming it.
There are around more than 5000 indexes. Some of the other renowned and recognized indexes include the Dow Jones industrial average, Nasdaq, Wilshire 5000, and Morgan Stanley Capital international. Among them, Wilshire 500 is the US-based stock which includes stocks from the US market solely. The US stock market has a wide variety of indexes that can be utilized through different methodologies and sub categorizations to fulfill different financial purposes. However, the media is responsible for exhibiting the performance of top-tiered indexes, which are carrying out performance-based indications regularly. Investors use indexes to understand performance proxies and allocation guides. Passive index investing is mostly carried out through exchange-traded funds that track the performance of specific funds.
We can say that trading in the Russell 3000 list is like trading in the ocean; you get plenty of opportunities to catch a fish. You get to do your own analysis, and the probability is always high that you find what you are looking for. Compared to Dow Jones Industrial Average (DJIA) and Nasdaq, Russell 3000 does provide a wider perspective and representation of the U.S equity market.