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Russell Reconstitutes
Russell Investments conducted its widely watched annual reconstitution of its indexes at the end of June.
With the completion of the rebalancing, the U.S.-focused Russell 3000 had a total market capitalization of $13.4 trillion, up by $2.8 trillion from the previous year. Meanwhile, the broad Russell Global Index was up $6 trillion from the previous year to $40.8 trillion. It saw the addition of 1,190 stocks (and the deletion of roughly 900), bringing the number of total stocks covered by the index to 10,590 issues from 61 different countries.
The U.S. had the most additions of any country, with 234 companies entering its broad index. It was followed by Canada at 110, Hong Kong at 90, India at 89 and Australia at 74.
The global indexes also saw the removal of four markets that did not have any stocks that qualified for inclusion: Argentina, Bulgaria, Lithuania and Sri Lanka. Additionally, Latvia, Pakistan, Slovakia, Ukraine and Vietnam, which dropped out of the indexes during last year’s reconstitution, still did not have any eligible stocks.
Exxon Mobil remains the largest company in the U.S. index, although Russell noted that its market capitalization had fallen off by more than 16 percent from the previous year. Berkshire Hathaway also entered the index for the first time and was the largest addition to the Russell 3000 this year, securing a spot among the index’s top 10 components.
BarCap Rolls Out EMEA Convertibles Index
In early June, Barclays Capital launched an index of convertible securities originating in Europe, the Middle East and Africa.
According to Barclays, the Barclays Capital EMEA Convertible Securities Index only includes convertible securities that are covered by multiple market makers. The company said that the broad index, which is intended as a benchmark for both active and passive investment strategies, can be broken down into subindexes defined by convertibles profile, sector classification, currency, country and credit quality.
Russell Also Plans Carbon Indexes
In mid-June, Russell Investments announced a deal with carbon market research provider RepuTex, under which the firms would collaborate on the creation of global environmental indexes designed to measure the performance of stocks after adjusting for the impact of costs associated with reducing carbon emissions.
While Russell will calculate and maintain the indexes, RepuTex will evaluate the stocks of the Russell Global Developed Large Cap Index to assess their individual “carbon risk” and to identify those companies currently operating in the areas of clean technology and alternative energy.
Russell anticipates launching the new index family in the fourth quarter.
FTSE In Carbon Index Partnership
A June announcement from FTSE outlined the firm’s new carbon index family, the FTSE CDP Carbon Strategy Index Series, and signaled the launch of the initial indexes.
According to FTSE, the new series will provide “carbon-tilted” versions of existing FTSE indexes. The U.N.-sponsored Copenhagen summit on climate change in 2009 established standards for lower emissions levels in order to reduce or limit global warming. The new FTSE indexes will use the same components as their corresponding standard FTSE benchmarks, but the weightings of the components will be adjusted to reflect their exposure to the increased costs that come with reducing emissions—their “carbon risk.”
The first two indexes are adapted versions of the FTSE All-Share Index covering the United Kingdom and the FTSE 350 Index.
The Carbon Disclosure Project, FTSE’s partner for the index family, is funded by more than 500 institutional investors and carbon research provider ENDS Carbon.
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