A team of index, market, ETF product and exchange experts recently gathered on Nasdaq #TradeTalks, hosted by Nasdaq Global Markets Reporter Jill Malandrino, for a virtual panel discussion to exchange views and perspectives on the #RussellRecon, which concludes at market close this Friday, June 26.
It was a lively discussion highlighting the size and importance of the annual rebalance of the Russell US Indexes as well as the impact it has on a wide range of market participants:
Catherine Yoshimoto – director of product management, FTSE Russell: “Russell Reconstitution is a complete realignment of the Russell US Indexes to reflect market changes in the last year and impacts about $9 trillion in investor assets that follow the indexes. It is a closely watched, well communicated and transparent market event.”
Ed Coughlin – director of trading services, Nasdaq: “I would say it is the largest trade of the year. All eyes are focused on this day of the year and everyone’s in on Russell. It is amazing that, last year, 1.2 billion share trades were executed in about one second and we anticipate a potentially larger volume this year. Technology has allowed us to speed up the process and Nasdaq has been a leader and innovator in this space, increasing flexibility, speed and efficiency for large trading events such as the Russell Reconstitution.”
Steven Desanctis – head of US SMID research, Jefferies: “As Catherine highlighted, the Russell Reconstitution will reset the cap weightings and style designations and drive sector shifts across the indexes. This is quite important to long-only managers who track the indexes and may find themselves shifting more to new sectors and styles. In terms of our own market perspective, we are a little less defensive in terms of portfolio positioning right now and leaning toward cyclicals and secular growth.”
Nick Kalivas – senior equity ETF strategist, Invesco: “The Russell Reconstitution is going to completely realign the stocks going into ETFs based on the Russell US Indexes. So, this is significant for an ETF issuer on two levels; the size factor is important as well as the shuffling of the deck with stocks flowing in and out of the factor indexes as they move from growth to value or value to growth, for example.”
The 32nd annual Russell US Indexes Reconstitution concludes at the close of the US equity markets on Friday, June 26. The close of the annual Russell Rebalance is typically one of the highest volume days of the year on the US equity markets as approximately $9 trillion in investor assets follow the Russell US indexes. Go to the FTSE Russell website for more information on Russell Reconstitution.
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