Revised index for Russell growth stocks and value stocks: the weight of a single company does not exceed 22.5%, and the total market value of companies with a weight of 4.5% or more does not exceed 45% of the index.
The world's second-largest index provider, FTSE Russell, has just announced that it will undergo a "major overhaul" of its US growth and value indices to limit the weight of large component stocks, resulting in a significant restructuring for over $7 trillion in stock funds.
On Friday local time, FTSE Russell announced that it will set weight caps on the constituents of the Russell style indices, mainly growth and value stock indices:
Any company's market capitalization in the style indices will not exceed 22.5%, while those companies with a proportion of 4.5% or more combined will not exceed 45% of the index.
The adjustment will begin in March next year and will be carried out after each quarterly and annual review.
FTSE Russell stated that the cap mechanism was adopted following an industry consultation in August, which received "broad support" feedback. Previously, some fund clients were particularly concerned about the high returns of the Russell 1000 Growth Index.
This adjustment aims to address the market's overexposure to large-cap technology stocks in many portfolios, touching upon regulatory limits. Two months ago, FTSE Russell's competitor, S&P Dow Jones Indices, made similar adjustments to curb the dominance of the largest companies.
Russell uses the US market as its original benchmark, with constituents required to be US companies. The related indices include a variety of different types of stocks, providing broad market coverage. As an investment benchmark, the Russell style indices involve $7.2 trillion in stock assets, representing 68% of the total assets of all Russell-associated indices.
Editor/rice
