Description - Russell 1000 Index
Stock Market
Investing &
Trading System
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
percent 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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