Russell 1000 index

Definition

The Russell 1000 index is a widely followed stock market index that measures the performance of the largest 1,000 publicly traded companies in the United States.

What is the Russell 1000 index?

Like many other major stock market indexes, the Russell 1000 index is weighted by market capitalization. This means that larger companies with higher market capitalizations have a greater impact on the index’s performance compared to smaller companies.

The index provides broad coverage of various sectors and industries within the U.S. equity market and includes companies of different sizes, growth profiles, and business models.

To be included in the Russell 1000 index, companies must meet certain liquidity and trading volume requirements. This ensures that the index components are sufficiently liquid and tradable for investors.

The Russell 1000 Index is considered representative of the overall U.S. equity market. Changes in the index’s value and composition are closely monitored by investors and market participants as indicators of market trends and sentiment.

Example of the Russell 1000 index

Suppose an investor wants to assess the performance of their investment portfolio relative to the broader U.S. equity market. They may compare their portfolio’s returns to the returns of the Russell 1000 index over a specific period, such as one year. If the investor’s portfolio outperforms the Russell 1000 index, it indicates that their investments have performed well relative to the largest U.S. companies. Conversely, if the portfolio underperforms the index, it suggests that adjustments may be needed to improve performance.