Tech shakeup for Russell indexes: 240 new companies, like SuperMicro Computer and Micro Strategy, to join
Recently, FTSE Russell announced the 2024 date of the reconstitution of the US broad market Russell 3000 Index and the Russell Microcap Index.
All of the indexes’ constituents are being reevaluated for their positions, with new companies set to join as well. And this year’s rebalancing of the Russell companies promises to be quite a significant one.
In total, almost 40 new companies are set to join the Russell 1000 index from their previous places in the Russell 2000 – a significant amount of change in one year for both indexes.
The changes will also reflect a growing number of Tech stocks into the Russell 1000, and more Healthcare stocks in the Russell 2000.
The reconstituted numbers will reflect from June 28th, after US markets close, and be communicated to markets by FTSE Russell on June 30th.
What are the Russell indexes?
The Russell Indexes are a series of well-known American indices which form collections of US stocks that represent, in total, the majority of the US stock market.
The Russell indexes are: the Russell 3000 Index, the Russell 1000 Index, the Russell 2000 index, and the Russell Microcap Index. All four indexes are managed and owned by a company called FTSE Russell.
Named after the amount of stocks it boasts, the Russell 3000 is the largest of these indices. This index hosts America’s 3000 biggest companies, from mega corporations such as Apple and Microsoft all the way down, and as such represents the vast majority of all companies in the USA.
These 3000 are then broken up into two other indices as well: the Russell 1000, for the top third of the 3000, and the Russell 2000 (also known as the ‘Russell Midcap Index’).
All companies too small to make the Russell 2000, fall into the Russell Microcap Index.
SuperMicro Computer and Micro Strategy to enter Russell 1000
A grand total of 38 companies are being added to the Russell 1000 Index, with 28 of those moving up from the Russell 2000 Index.
Of the entries into the Russell indices, two of the most notable are American tech companies SuperMicro Computer and Micro Strategy, which will both debut on the Russell 1000 Index as of May 28th.
Other notable mentions include computer makers Dell Technologies, which will enter the Russell 3000 for the first time, and three other new additions to the Russell 1000: consumer discretionary stock Carvana, energy company Permian Resources and industrial corporation Comfort Systems USA.
Tech still dominating US stocks space
As the two most significant Russell 1000 introductions, SuperMicro Computer and Micro Strategy represent the ongoing dominance of tech stocks in the markets, as AI bullishness continues.
In fact, the largest industry in the Russell 1000 remains technology, which also had the largest increase, going from 32.9% to 34.6%.
The second largest is Consumer Discretionary at 13.7%, which had the largest decrease from 14.1%.
This notable decline may point toward the growing fears of a US recession, as American investors and shoppers alike tighten their belts.
Over 200 new companies to join Russell 2000
A staggering 243 companies are joining the Russell 2000 Index, with 30 dropping down from the Russell 1000 Index or Russell Midcap® Index, and 116 shifting up from the Russell Microcap.
Encouragingly, much fresh blood is coming in, with 86 companies joining from outside of the Russell US Indexes universe.
Healthcare and pharmaceuticals dominates Russell 2000
A clear trend of healthcare stocks prevailing can be seen in this year’s numbers.
A total of 41 of the 243 companies are joining the Russell 2000 Index are classified as healthcare stocks. Of the 86 new companies joining from outside the Russell indices, 26 are from healthcare, while a majority of 7 of the index’s 11 new IPOs joining are also from healthcare.
Nevertheless, on the whole the largest industry in the Russell 2000 remains Industrials sector (with 19.1%), followed by Healthcare in second place at 16.7%.
Health and pharmaceutical stocks saw the largest increase of all the Russell 2000’s sectors, leapfrogging from 14.7% to over 16% – kicking financial stocks (16%) out of the second spot.