What Is the Russell 3000 Index?
The Russell 3000 Index is part of the FTSE Russell that provides exposure tothe U.S. stock market. Its date of inception is Jan. 1, 1984.The index measures the performance of the largest 3,000 U.S. companies representing approximately 96% of the investable U.S. equity market.
Key Takeaways
- The Russell 3000 Index is part of the FTSE Russell group.
- The index measures the performance of the largest 3,000 U.S. companies representing approximately 96% of the investable U.S. equity market.
- The Russell 3000 Index is the basis for the large-cap Russell 1000 and the small-cap Russell 2000 index.
- Large-cap stocks direct a majority of the index’s performance.
Understanding the Russell 3000 Index
The Russell 3000 Index is a building block for the large-cap Russell 1000 and the small-cap Russell 2000 index. The largest 1,000 stocks indexed in the Russell 3000 constitute the Russell 1000, while the Russell 2000 is a subset of the smallest 2,000 components of the Russell 3000.
The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is reconstituted annually to ensure that new and growing equities are included. Securities in the financial, consumer discretionary, health care, and technology sectors represent a significant portion of the underlying index.
As of May 31, 2023, the average market capitalization of the Russell 3000 stock holdings was nearly $559.34 billion. The index had a total of 2,911 constituents.
Russell 3000 Top Holdings
| Company | Sector |
| Apple (AAPL) | Technology |
| Microsoft (MSFT) | Technology |
| Amazon (AMZN) | Consumer Discretionary |
| Nvidia (NVDA) | Technology |
| Alphabet Class A (GOOGL) | Technology |
| Alphabet Class C (GOOG) | Technology |
| Meta (META) | Technology |
| Berkshire Hathaway (BRK.B) | Financials |
| Tesla (TSLA) | Consumer Discretionary |
| UnitedHealth Group (UNH) | Health Care |
Russell Index 3000 Reconstitution
The Russell U.S. Indexes are designed to reflect the ever-changing U.S. equity market, and the annual reconstitution process is critical to maintaining accurate representation.When the indexes are reconstituted, the breakpoints among large-cap, mid-cap, and small-cap stocks are redefined to ensure market changes that have occurred in the preceding year are captured.
Companies are evaluated to determine where they lie along the investment spectrum from value to growth. Companies will be added to, removed, or swapped among the Russell 3000, 2000, and 1000. Stocks in the Russell 3000 index are reconstituted once a year, on the last Friday in June.
Investing in the Russell 3000 Index
FTSE Russell Group does not offer direct investment opportunities. Investors can purchase individual shares of each company represented in the Russell 3000 index, but many financial institutions offer exchange-traded funds (ETFs) or index funds that mimic the performance of the Russell 3000 and contain its component stocks.
Russell 3000 vs. Other Indexes
TheIndex tracks the largest 500 publicly traded companies, with exposure to 80% of U.S. stocks, compared to the Russell 3000’s 96%. The Dow Jones Industrial Average (DJIA)measures the performance of 30 large companies covering all sectors except transportation and utilities.
The Nasdaq Composite Index measures stocks listed exclusively on theNasdaqexchange. There are over 3,000 securities listed on the Nasdaq composite, which gives it a broader exposure than the S&P 500 or the DJIA, but weighs heavily in the technology sector.
Limitations of the Russell 3000 Index
- Large-cap stocks direct a majority of the index’s performance, and the returns of other segments are overlooked.
- Limits an investor's portfolio to domestic stocks without investment in other assets.
- The index data is only updated quarterly or annually.
Can Individuals Invest Directly in an Index?
Investors cannot invest directly in a stock index, such as the Russell 3000 or the S&P 500 but can invest in an index fund or ETF that tracks the performance of the target index.
How Are Stocks Evaluated for Inclusion in the Russell 3000?
FTSE Russell calculates the total market capitalization of each stock to determine whether it is large enough to include in the Russell indices. Total market capitalization is determined by multiplying total outstanding shares by the market price as of the rank day for stocks considered at annual reconstitution.
What Is an Index Fund?
An index fund is a type ofmutual fundorETFwith aportfolio constructed to track the components of a financialmarket index, such as the Russell 3000.
The Bottom Line
The Russell 3000 Index, established in 1984, measures the performance of the largest 3,000 U.S. companies representing approximately 96% of the investable U.S. equity market. Large-cap stocks direct the index’s performance and include holdings such as Apple, Microsoft, and Meta.
Article Sources
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FTSE Russell. "Russell 3000 Factsheet," Page 1.
FTSE Russell. “Russell 1000 Index Factsheet."
FTSE Russell. “Russell 2000 Index Factsheet."
FTSE Russell. "Construction and Methodology," Page 11.
S&P Dow Jones Indices. "U.S. Core."
S&P Dow Jones Indices. "Dow Jones Industrial Average."
Nasdaq. "What Is the Nasdaq Composite and What Companies Are in It?"
FTSE Russell. "Construction and Methodology," Page 19.
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