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The Markets October 25, 2010
Russell Unveils Equal Weight Equity Indexes
Russell Investments launched the first five equity benchmarks
in a series of equal weight equity indexes that reflect U.S. and global
market segments.
Reported by Fred Schneyer
A news release said the new Russell Equal Weight Indexes manage for sector risk, and they can be replicated easily to serve as the basis of investable products.
According to the announcement, Russell’s approach to the construction of equal weight indexes is designed to address or eliminate issues such as inherent sector biases, potential capacity constraints and liquidity concerns, as well as high turnover and rebalancing issues. To address the concern of sector risk posed by constituent equal weight indexes, for example, Russell first applies its equal weight methodology within each of the nine Russell Global Sectors: Consumer Discretionary, Consumer Staples, Energy, Financial Services, Health Care, Materials & Processing, Producer Durables, Technology, and Utilities.
The new indexes will be maintained with daily corporate actions and monthly share adjustments as well as re-weighted quarterly. They also will be rebalanced each June when Russell reconstitutes its global family of market capitalization weighted indexes.
Initially, the new family of indexes will feature the U.S. large cap Russell 1000 Equal Weight Index, U.S. small cap Russell 2000 Equal Weight Index, Russell Midcap Equal Weight Index, Russell BRIC (Brazil, Russia, India, China) Equal Weight Index, and the Russell Greater China Large Cap Equal Weight Index.