The 2020 Russell US Indexes Reconstitution, which officially began with “rank day”, May 8th, and concludes Friday, June 26, underscores a notable divergence between the large and small ends of the US equity market.
FTSE Russell’s June 5 announcement on projected changes to the Russell US Indexes, followed by approximately $9 trillion in investor assets, points out that in a year in which total US market capitalization decreased by 1%, the market capitalization of the 10 largest US companies increased by more than 23%. In fact, three companies (Microsoft, Apple & Amazon), surpassed $1 trillion in size as of May 8 rank day.
The market capitalization of the smallest US company this year (Limestone Bancorp), on the other hand, is $94.8 million, representing a 38% decline in the smallest company from 2019 and the first time since 2009 that the smallest stock's market capitalization is less than $100 million.
Catherine Yoshimoto – director, product management, FTSE Russell:
“While overall capitalization for the US equity market stayed relatively flat this year—in itself somewhat of a surprise given recent market volatility—our 2020 Russell US Indexes Reconstitution tells an interesting story about a growing gap between the largest and smallest US stocks.”
Philip Lawlor – managing director, Head of Global Markets Research, FTSE Russell:
“Despite making quite a resurgence in recent months, US small-cap stocks still have a great deal of ground to make up from the depths of their pandemic-driven losses, and so it is not surprising to see such a pronounced spread between the large and small ends of the US equity market as of May 8 rank day for the annual Russell Reconstitution. The Russell 2000’s relative tilt to financials, producer durables and materials, which were pummeled in the March pandemic, may well improve its performance relative to large-caps going forward if the bounce back scenario that investors hope for continues to play out.”
The posting of the preliminary lists of additions and deletions after US markets close on Friday, June 5 is the first public step in the annual reconstitution process for the Russell US Indexes. Updates to the lists will be posted to the FTSE Russell website after US market close on June 12 and June 19. If any changes to the publicly announced membership lists occur during the query period, technical notices will be published to the FTSE Russell website. The final index membership lists, with breakouts for the Russell 1000 Index, the Russell 2000 Index and the Russell Midcap Index, will be published on Monday June 29 when the Russell Reconstitution takes effect and the newly reconstituted indexes begin to operate.
Go to the FTSE Russell website for more information on Russell Reconstitution, or go to the FTSE Russell blog to see more insight on Russell 2000 performance and post-lockdown analysis from Philip Lawlor.
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