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Breaking with more than 20 years of tradition, Russell announced in September that it would begin adding initial public offerings (IPOs) to its indexes on a quarterly basis, rather than only once a year. The move was effective immediately, and Russell added 48 IPOs to its index at the close of the third quarter.
"As an IPO becomes part of the opportunity set for investors, Russell indexes will capture these new securities in a more timely manner," says Lori Richards, senior product manager, Russell Indexes. Interestingly, the company is not deleting existing index members to make room for the new IPOs; that adjustment be made at the annual rebalancing. Instead, Russell will simply hold more securities in its index in the interim. In other words, the Russell 3000 is currently the Russell 3048. The new change reflects the growing size and popularity of IPOs, a trend highlighted by the massive August IPO of the Internet search engine Google. Russell expects to add nearly 100 IPOs to its index in 2004. Russell says that the change will not alter the transparency or cost structure of its indexes. The methodology for IPO additions is posted on its Web site, http://www.russell.com/. |
