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.
© 2020 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE Global Debt Capital Markets Inc. and FTSE Global Debt Capital Markets Limited (together, “FTSE Canada”), (4) MTSNext Limited (“MTSNext”), (5) Mergent, Inc. (“Mergent”), (6) FTSE Fixed Income LLC (“FTSE FI”), (7) The Yield Book Inc (“YB”) and (8) Beyond Ratings S.A.S. (“BR”). All rights reserved.
FTSE Russell® is a trading name of FTSE, Russell, FTSE Canada, MTSNext, Mergent, FTSE FI, YB and BR. “FTSE®”, “Russell®”, “FTSE Russell®”, “MTS®”, “FTSE4Good®”, “ICB®”, “Mergent®”, “The Yield Book®”, “Beyond Ratings®” and all other trademarks and service marks used herein (whether registered or unregistered) are trademarks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, FTSE Canada, Mergent, FTSE FI, YB or BR. FTSE International Limited is authorised and regulated by the Financial Conduct Authority as a benchmark administrator.
All information is provided for information purposes only. All information and data contained in this publication is obtained by the LSE Group, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data is provided "as is" without warranty of any kind. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the accuracy, timeliness, completeness, merchantability of any information or of results to be obtained from the use of FTSE Russell products, including but not limited to indexes, data and analytics, or the fitness or suitability of the FTSE Russell products for any particular purpose to which they might be put. Any representation of historical data accessible through FTSE Russell products is provided for information purposes only and is not a reliable indicator of future performance.
No responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this document or links to this document or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if any member of the LSE Group is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, such information.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing contained in this document or accessible through FTSE Russell Indexes, including statistical data and industry reports, should be taken as constituting financial or investment advice or a financial promotion.
Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back- tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.
This publication may contain forward-looking assessments. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking assessments are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially. No member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking assessments.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group data requires a licence from FTSE, Russell, FTSE Canada, MTSNext, Mergent, FTSE FI, YB and/or their respective licensors.