Russell Indexes to Reclassify Greece From Developed to Emerging Market Country at Upcoming Annual Index Reconstitution
- Change is a result of Russell Indexes market risk review process
- Shift driven by rules-based, objective analysis of macro & operational risk
- Becomes effective at conclusion of Russell Indexes annual reconstitution in late June
SEATTLE, MARCH 1, 2013 — Russell Investments today announced the 2013 schedule for its annual index reconstitution process, designed to capture and reflect global equity market shifts to ensure that multi-asset investors continue to have the most accurate proxy for global markets.
One important change at this year's reconstitution is that country constituent Greece will be reclassified from a developed to an emerging market country. This conclusion by Russell Indexes results from a three-year market risk review process, as prescribed by Russell's methodology, in which Greece did not meet macro- and operational risk criteria for developed market status, but did meet classification criteria for inclusion in emerging markets. Russell's country classifications are announced each year in March and any changes become effective at the conclusion of its annual index reconstitution process in late June.
"Our analysis of Greece and conclusion to reclassify its market status has been guided by the rules-based, objective and transparent methodology for Russell Global Indexes," said Russell Indexes senior research analyst Mat Lystra. "Having a clear road map to follow and the global resources to carry out the level of ongoing analysis needed to evaluate Greece against the same risk and efficiency criteria among all countries in the Russell family of global indexes has been extremely helpful in this process."
The Russell Index reconstitution process includes an intensive review of numerous market factors, as outlined in the Russell Index methodology, to recalibrate the indexes each year to reflect current market conditions. As part of the reconstitution, Russell Indexes analyzes risk factors and country classifications as part of a dynamic, long-term market risk review designed to identify material changes to the risk and investability characteristics of countries included in the Russell family of global indexes. While reclassifications are rare, they do occur if a country no longer meets the criteria for its current classification. It takes three years of sustained changes in economic criteria for a country to be reclassified, and reclassification can happen in different ways. A frontier or emerging market country can advance to emerging or developed status, while a developed or emerging market country can shift to emerging or frontier. Russell's methodology requires developed markets, in general, to be the least risky and most efficient in which to trade, with emerging and frontier markets progressively more risky and less efficient along the spectrum.
According to its transparent, rules-based process, Russell will post lists of preliminary additions and deletions to the Russell Global Index, U.S. broad market Russell 3000® Index and Russell Microcap® Index on its website after the U.S. market close on Friday, June 14th, 2013. Updated lists, if necessary, will be posted at the same location on June 21st and June 28th. Membership changes to Russell's comprehensive family of global market indexes take effect as the markets close on Friday, June 28th.
|2013 Russell Indexes Reconstitution Schedule |
| June 14th || Preliminary list of additions and deletions for the Russell 3000®, Russell Microcap® and Russell Global Indexes |
| June 21st || Preliminary membership updates |
| June 28th || Final additions and deletions |
| July 1st || Final List posted for Russell Global Indexes and leading U.S. benchmarks Russell 1000®, Russell 2000®, Russell 3000®, Russell Midcap® and Russell Microcap® Indexes |
Lystra provides more background on the analysis which led to the reclassification of Greece to an emerging market in a paper entitled Greece: Re-emerged and a video, available on the Russell Indexes website.
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