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In Practice June 30, 2010
Reconstitution of Russell Global Index Completed
Russell Investments has completed the annual realignment of the Russell Global Index and added 1,190 stocks to the equity benchmark.
Reported by PLANSPONSOR staff
With 10,590 stocks from 61 countries, the Russell Global Index currently shows a total market capitalization of $40.8 trillion, which is an increase of 17% from $34.8 trillion at this time in 2009. The newly reconstituted Russell Global Index also shows a market capitalization range of $283.1 billion to $112 million (compared to $348 billion to $78 million at this time last year), and a median market capitalization of $21 billion, up from $20.5 billion at this time last year, Russell said.
The list of additions for the global index included 45 initial public offerings that came to market during the second quarter, substantially more than the 14 IPOs added at this time in 2009.
A stock’s addition to the Russell Global Index, which covers 98% of the investable global market, means automatic inclusion into several sub-component indexes. For example, a small-cap stock in China also is added to the Russell Emerging Markets Index, Russell Asia Pacific Index and Russell Global Small Cap Index, among others, as well as the related value or growth style indexes.
Sectors with the largest weighting in the newly realigned index are financial services (22%), technology (11.7%), producer durables (11.2%), consumer discretionary (11.2%) and energy (10.3%). Among the 1,190 additions, the materials & processing sector led with 199 stocks on the list. It was followed closely by financial services (182) and technology (179).(Cont...)
Global Changes
Steve Wood, chief market strategist for Russell said: “The newly aligned index shows that some segments of the global market have been more affected than others by recession-related volatility.”
The United States led all countries with 234 stock additions to the global index, while Canada ranked second with 110. The Canadian market showed a relatively strong gain within the global benchmark with a market capitalization increase of 22% to $1.6 trillion from this point last year.
The top 10 markets in terms of stock additions to the index also included Hong Kong (90), India (89), Australia (74), Taiwan (66), Japan (64), China (57), the United Kingdom (51) and South Korea (44). (Combining Hong Kong, Taiwan and China, the Russell Greater China Index received 213 newly eligible stocks.)
Looking at countries represented in the index in terms of market capitalization, only Singapore dropped off the top 20 list, and it was replaced by the Netherlands. Countries with the largest weighting in the newly adjusted index are the United States (43.8%), Japan (8.5%), United Kingdom (6.9%), Canada (4.5%) and France (3.5%).
Four countries are no longer represented in the index as a result of this year’s reconstitution process: Argentina, Bulgaria, Lithuania and Sri Lanka. Additionally, the following five countries which lost representation last year did not see any stocks move back into the index: Latvia, Pakistan, Slovakia, Ukraine and Vietnam.
Altogether, Russell’s indexes account for about $3.9 trillion in assets benchmarked, as of December 31, 2009.