The Russell 1000 tracks the performance of the 1,000 largest public companies in the U.S. Run by the U.K.-based FTSE Russell Group, the Russell 1000 is a subset of the Russell 3000 index.
What Is the Russell 1000 Index?
The Russell 1000 is a stock market index measuring the performance of the largest 1,000 public companies in the U.S. by market capitalization, or the total value of all of their outstanding shares. It represents a third of the Russell 3000, which is the 3,000 largest U.S. public companies by market capitalization. This is equivalent to 98% of all U.S. public companies.
Since the market capitalization of companies expands and shrinks over time, FTSE Russell Group reevaluates the ranking of firms in its indexes every May to ensure accuracy. When new companies go public, like through initial public offerings (IPOs), these stocks are added to the index quarterly if they clear the market cap threshold. For this reason, the Russell 1000 may list more than 1,000 stocks.
Russell 1000 Companies
The top 10 Russell 1000 companies by market capitalization are likely ones you have heard of. As of April 30, 2021, they include:
|Alphabet Inc Cl A (Google)||GOOG|
|Alphabet Inc Cl C (Google)||GOOG|
|JP Morgan Chase & Co.||JPM|
|Johnson & Johnson||JNJ|
|Note: Google appears twice in the ranking because of its different share classes.|
FTSE Russell Group maintains specialized indexes that track the performance of subsets of the Russell 1000, such as:
- Russell 1000 Value
- Russell 1000 Value Dynamic
- Russell 1000 Value Defensive
- Russell 1000 Growth
- Russell 1000 Growth & Value
- Russell 1000 Growth Dynamic
- Russell 1000 Growth Defensive
- Russell 1000 Global Exposure
- Russell 1000 Pure Domestic Exposure
Russell 1000 vs Other Indexes
The Russell 1000 is like the S&P 500 in that they both track the leading U.S. large-cap stocks. However, the S&P 500 only represents about 80% of the U.S. market. Meanwhile, the Russell 1000 tracks twice as many firms as the S&P 500, accounting for approximately 92% of the U.S. stock market, including many mid-cap stocks.
Mid-cap companies can be more volatile than large-cap stocks, which means the Russell 1000 may experience more volatility than the S&P 500. Additionally, since the S&P 500 rebalances on a quarterly basis, rather than annually like the Russell 1000, it may provide a clearer indicator of how the market is faring as a whole during the course of the year.
Russell 1000 vs Russell 2000
The other two-thirds of the Russell 3000, the Russell 2000 is an index of 2,000 small-cap stocks. The Russell 2000 represents approximately 10% of the U.S. investment market. Since it is composed of small-cap companies, it generally displays more volatility than the Russell 1000. Like the Russell 1000, the Russell 2000 is reconstituted once per year to ensure the index remains a true barometer of small-cap investing.
How to Invest in the Russell 1000
Though it is possible to invest in the Russell 1000 by purchasing each of the individual stocks, this would be a cumbersome process for accessing the index given its sheer size. Most investors will be better served by purchasing either an exchange-traded fund (ETF) or an index fund based on the Russell 1000.
While FTSE Russell does not directly offer any ETFs or index funds, a number of funds offer Russell 1000 ETFs or index funds to investors. You can purchase Russell 1000 ETFs or index funds through your online brokerage.
Should You Invest in the Russell 1000?
Deciding if the Russell 1000 index has a place in your investment portfolio depends on a number of factors. Most experts recommend you invest in a broad market stock fund, like the Russell 1000 or S&P 500, though you probably won’t want both as they contain many of the same companies.
If you aren’t in either yet, though, you’ll want to consider whether you want the greater representation of the U.S. economy (and mid-cap companies) that the Russell 1000 provides. These companies may cause slightly more volatility in your investment portfolio, meaning you may see more short-term losses, but they also generally offer the potential for slightly higher returns. The S&P 500, on the other hand, may offer more stability as it is composed entirely of comparatively stable large-cap companies. Be sure to speak with an investment professional to determine whether you want to include a Russell 1000 or S&P 500 index fund in your portfolio.