What Is the Russell 1000 Index?
The Russell 1000 Index is a prominent stock market index serving as a benchmark for investors. Representing the top 1000 companies by market capitalization in the United States, it is a subset of the larger Russell 3000 Index. Owned and operated by FTSE Russell Group, the index is a key indicator for large-cap investing.
Key Takeaways
- The Russell 1000 Index captures the top 1000 companies by market capitalization in the U.S.
- It is a significant subset of the broader Russell 3000 Index.
- Approximately 93% of the total market cap of U.S. listed stocks is covered by this index.
- FTSE Russell provides monthly updates on its performance and characteristics.
Insightful Beginnings: Understanding the Russell 1000 Index
First launched on January 1, 1984, by FTSE Russell, the Russell 1000 Index forms a crucial part of their index family. It is a market capitalization-weighted index, where larger companies have a more substantial impact on the index’s performance. This index boasts about 93% of the entire market capitalization of publicly listed stocks in the U.S., getting reconstituted every year in May to ensure it reflects the current market structure. Newly listed IPOs are considered quarterly for potential inclusion.
Key Companies of the Russell 1000 Index
To find out which companies are included, FTSE Russell ranks all stocks in the Russell 3000 by their market cap, creating a breakpoint at the 1000th stock. This determines the eligibility criteria for the Russell 1000. Many stocks move between the Russell 1000 and Russell 2000 during the annual reconstitution. As of May 31, 2023, the top 10 constituents are:
- Apple (AAPL)
- Microsoft (MSFT)
- Amazon (AMZN)
- Nvidia (NVDA)
- Alphabet Class A (GOOGL)
- Alphabet Class C (GOOG)
- Meta (META)
- Berkshire Hathaway (BRK.B)
- Tesla (TSLA)
- UnitedHealth Group (UNH)
Russell 1000 Performance Snapshot
FTSE Russell offers monthly performance updates. As of December 31, 2022, the index comprises 1,010 holdings, sporting an average market cap of $591.44 billion and a median market cap of $11.81 billion. In 2022, its annual return was -19.13%, with a 3-year average return of 12.45%.
Investing in the Russell 1000 Index
Investors can dive into the Russell 1000 Index via mutual funds or ETFs. Some prominent ETFs are:
iShares Russell 1000 Index ETF (IWB)
Noted for its extensive large-cap exposure, the iShares Russell 1000 Index ETF seeks to replicate the holdings and returns of the Russell 1000 Index. Established on May 15, 2000, and traded on the NYSE, its AUM as of June 30, 2023, stands at $30.68 billion.
iShares Russell 1000 Value ETF (IWD)
Targeting medium to large-cap U.S. equities as per the Russell 1000 index, IWD tracks a selection of stocks poised for value growth. Launched on May 22, 2000, it is also listed on NYSE, managing assets worth $51.09 billion as of June 30, 2023.
Diverse Outfits: Variations of the Russell 1000 Index
FTSE Russell also presents different variations derived from the Russell 1000:
- Russell 1000 Value
- Russell 1000 Growth
- Russell 1000 Defensive
- Russell 1000 Dynamic
- Russell 1000 Growth-Defensive
- Russell 1000 Growth-Dynamic
- Russell 1000 Value-Defensive
- Russell 1000 Value-Dynamic
Comparing Giants: Russell 1000, Dow Jones, and S&P 500
Though broader than the Dow Jones Industrial Average and S&P 500, the Russell 1000 is esteemed along with these benchmarks for large-cap stocks. The DJIA tracks the top 30 U.S. blue-chip stocks except for utilities and transportation, while the S&P 500 encapsulates 500 leading companies, giving more precise insights into the U.S. economy.
The Russell 2000 Index: A Close Relative
Focusing on smaller companies, the Russell 2000 Index includes the smallest 2,000 stocks within the broader Russell 3000 Index.
Criteria for Russell 1000 Index Inclusion
Stocks are added or removed from the Russell 1000 based on market capitalization, share price, and trading volume amongst other factors.
Dividends and the Russell 1000 Index
As of May 31, 2023, the dividend yield for the Russell 1000 was 1.60%.
The Final Word
Operated by FTSE Russell Group, the Russell 1000 Index measures the top 1000 companies by market cap in the U.S. Constituting 93% of the entire U.S. market value, it’s a critical reference for large-cap investors.
Related Terms: Russell 3000, Russell 2000, S&P 500, Dow Jones Industrial Average, index fund.
References
- FTSE Russell. “Constituents & Weights”.
- FTSE Russell. “Russell 1000 Factsheet”, Page 2.
- FTSE Russell. “Russell 1000 Factsheet”, Pages 1-2.
- iShares. “iShares Russell 1000 ETF”.
- iShares. “iShares Russell 1000 Value ETF”.
- FTSE Russell. “Russell 1000 Factsheet”, Page 1.
