INDEXING DEVELOPMENTS
By Journal of Indexes Staff

Russell, Reconstituted

The annual Russell reconstitution went off without an apparent hitch, as $3.8 trillion benchmarked to the U.S. family of Russell indexes adjusted to changes in the underlying benchmark. The Russell indexes are rebalanced at the end of every June, with new companies entering the indexes and companies jumping fro m the large-cap Russell 1000 to the small-cap Russell 2000, and vice-versa. Many people call it the "biggest day on the indexing calendar."

Only 263 companies entered the Russell 2000 this year, a historic low for the index. By comparison, nearly 700 companies entered the index in 2000.

Both the sector compositions within the indexes and the balance between the growth and value style benchmarks stayed much the same this year, too.

Reflecting rising market values, the market-capitalization cutoffs for the indexes rose markedly: It now t a kes a market cap of about $2 billion to make it into the large-cap Russell 1000, and a market cap of $225 million to make it into the small-cap 2000. That's up 19 percent and 27 percent, respectively, from year-ago levels.

Wilshire Forms Advisory Board

Dow Jones Indexes and Wilshire Associates announced the creation of a new advisory board to help shepherd the Dow Jones Wilshire Index family as it "goes global" in the second half of 2006. The board features seven members of the "who's who" of indexing, including John Bogle and John Prestbo.

Russell Launches U.S. Microcap Styles

Russell Investment Group announced plans to launch growth and value variations of its Microcap Index in June. According to Russell, microcap growth and value stocks have performed very differently recently, and most microcap managers have a pronounced style bias.

A Fidelity To MSCI

Fidelity, which launched the world's first family of sector-based funds 25 years ago, is changing the benchmark on those funds from the Goldman Sachs sector indexes to sector indexes from MSCI. The move will impact most but not all of Fidelity's 58 sector funds, and will take place in September, pending shareholder approval. The change aligns Fidelity's funds with the dominant GICS classification benchmark, making it easier for investors to measure and manage their exposure across different asset classes.

Another BRIC In The Wall

The Bank of New York, Dow Jones and S&P all launched new indexe s tied to the so-called BRIC countries of Brazil, Russia, India and China in June. The indexes join an existing MSCI benchmark in the U.S., and indexes from Deutsche Bank and others overseas. European investors a l ready enjoy a number of funds tied to BRIC indexes, while in the U.S., Claymore Advisors has filed with the SEC for the right to launch an ETF tied to the Bank of New York BRIC Index.

Global Gold

S&P has joined up with the To ronto Stock Exchange (TSX) to develop a new index that will track the performance of gold mining companies around the globe. Canadian companies will dominate the index?no surprise, considering 60 percent of all gold mining companies a re listed in Canada-but it will include companies from around the world .

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