The Russell 3000 Index


The Russell 3000 Index is a very broad equity index comprised of the largest 3000 US exchange listed companies. The components of the Russell 3000 index account for nearly 98% of market capitalization in the United States. All the stocks listed are incorporated in the US. The Russell 3000 index was designed to be a benchmark of the total market in general.

The index is composed of the Russell 1000 and the Russell 2000. The Russell 1000 is composed of the largest 1000 market cap stocks and the 2000 are the remaining small cap stocks. Market capitalization is the value of a company equal to share price times the number of shares outstanding.

The index is maintained by the Russell Investment Group and is updated annually. The index is weighted by market capitalization, the larger firms being more influential. Large international firms are disqualified from membership in the Russell 3000 Index. The index was created on 31 December 1986 with a base value of $140. As of 1 January 2011 the index is valued at approximately $750 per share.

The Wilshire 5000 is another total market index. This broad equity index includes many smaller companies that are barely tradable. Some consider the Russell 3000 a more accurate benchmark of total market conditions. The Wilshire 5000 remains more popular. Both indexes are watched by most major institutions including the Federal Reserve Board.

The ticker symbol for the Russell 3000 index is ^RUA. There are many Exchange Traded Funds (ETFs) that follow the Russell 1000 and the Russell 2000. The iShares Russell 3000 Index ETF ticker is IWV, and is listed on the New York Stock Exchange. This fund is related to the general performance of the Russell 3000 Index fund. As of 1January 2011 this fund is trading at approximately $75 per share.The average daily trading volume is approximately 350,000 shares.

Nearly all investors follow a Stock Market Index since most stocks tend to move with the general market. The most popular of these are the Standard and Poors 500 (S&P-500) and the Dow Jones 30 (DJ-30), which is a price weighted index. These indexes are heavily traded and followed by investors worldwide.

Some of the top holdings of the Russell 3000 are Exon Mobile, Apple Inc, and Microsoft Corporation. The largest sectors covered by this fund are the Financial Services and Technology sectors each with approximately 17% of the total fund. Futures and option trading are available on the Russell 3000 Index.

Source by Dana DeCecco

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