Russell launches global equity indexes
U.S. leader offers global coverage without gaps, overlaps
Tacoma, WA- Russell Investment Group, creators of the small-cap Russell 2000® Index and market-leading family of U.S. equity indexes, today launches a fully-integrated family of global stock indexes. The Russell Global Indexes provide investors worldwide with a comprehensive set of benchmarks that cover small-cap and large-cap companies in developed and emerging markets.
Russell's family of U.S. indexes was created more than 20 years ago to support the company's core business of understanding and evaluating investment managers. Today, the Russell Global Index covers 98% of the investable global market, including more than 10,000 stocks, divided into a family of indexes that cover 22 regions and 63 countries.
"The global investment market has changed as skilled investors adopt an increasingly global outlook and seek to invest in the best stocks from around the world with less emphasis on company size or country of origin," said David Grieger, managing director, Russell Indexes. "These investors are finding that distinctions between traditionally 'emerging' and 'developed' markets have blurred as companies and financial markets grow in sophistication. While the new investment panorama has increased opportunities for investors, it also has made it more difficult to evaluate performance."
Grieger added that existing global benchmarks reflect only a sampling of stocks and not the entire investable universe.
"We're extending globally our same pioneering index methodology that gives investors objective and transparent tools to accurately measure distinct U.S. market segments," he said. "The 10,000 or so companies in this global benchmark are selected by float-adjusted market capitalization and their trading liquidity threshold, giving investors a cohesive and consistent framework for measuring investment performance globally-with no gaps or overlaps."
Russell's global index methodology is designed to benefit large plan sponsors as well as investment consultants, money managers and private wealth professionals who manage international assets. While providing investors with comprehensive coverage of the investable global market, it is built starting at the company level rather than on a country-relative basis.
"Russell's unbiased and transparent methodology better reflects the true global marketplace," Grieger said. "There is no sampling. The market dictates the index constituents. Our global index is designed to capture all sufficiently liquid stocks that are actively traded and readily accessible to global investors."
The Russell Global Index, which uses the broad-market Russell 3000® Index as its U.S. component, is divided into 300 core indexes that cover 22 regions, 63 countries, developed and emerging markets, capitalization tiers of small, mid and large, as well as sectors.
Key features include:
- Russell's global-relative design eliminates the gaps and overlaps created by other index providers when investment managers benchmark portfolios to different regional indexes, and it helps investors avoid sampling bias inherent in indexes that only include selected stocks in different countries or regions.
- Market capitalization breaks are applied globally, not on a country-by-country basis. For example, Russell uses the same cut-off point to determine small-cap stocks in the United Kingdom as it does in Panama. This process ensures that companies of the same size are accurately represented in the large- and small-cap indexes and across regions and countries.
- Russell offers the first truly global small-cap benchmarks for institutional investors. Russell's global small-cap universe includes more than 7,000 investable companies from countries throughout the world. It includes the Russell 2000 as well as the Russell Nomura Small Cap Index in Japan.
- The modular design enables access to numerous market segments across a variety of dimensions, for example, large-cap or small-cap stocks across regions or countries.
"We originally created the U.S. indexes as tools to help our plan sponsor clients more accurately measure the performance of investment managers, and we've listened to them to develop what they want to see in global indexes," said Ron Bundy, director, Russell Indexes. "We've focused our knowledge and experience as global investment managers and index providers to develop an integrated set of benchmarks to surpass those needs. With Russell indexes, they'll know the rules and they'll know the score."
Russell's innovative index design-including float-adjusted market capitalization, reconstitution, REIT inclusion, multi-factor style analysis and objective and transparent rules-has led to more assets benchmarked to Russell's U.S. index family than all other U.S. equity indexes combined. Russell's U.S. indexes currently have $3.8 trillion in assets benchmarked to them and account for 52% of assets benchmarked by U.S. institutional investors, according to Russell's examination of nearly 3,000 U.S. equity products listed in Nelson Information's Marketplace Web database.
"The indexes are our quantitative yardstick. The more realistic the picture, the better the analysis of manager or fund performance," said Bundy. "While most investors will have difficulty replicating our qualitative evaluation of money managers, the indexes allow everyone to use the same quantitative benchmarks that we use."
For more information on Russell Global Indexes, including daily performance returns, please go to www.russell.com/indexes/global.
Russell Investment Group is a registered trade name of Frank Russell Company, a Washington, USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of The Northwestern Mutual Life I nsurance Company. Indexes and benchmarks are unmanaged and cannot be invested in directly.