Health care and technology are set to play important roles in this year’s Russell rebalancing, according to FTSE Russell CEO Fiona Bassett. The annual reconstitution is scheduled to take place at Friday’s market close, with indexes adapting to trends in the broader market landscape. Bassett highlighted the impact on the Russell 1000, noting its replenishment by technology and the overall market direction shifting towards an economy focused on technology.
As a result of these changes, small tech winners are moving up to the Russell’s large-cap index, with companies like Super Micro Computer and MicroStrategy set to make their debut in the Russell 1000. Technology remains the largest sector in the index, representing 34.6% of the total weight. In contrast, the Russell 2000 is characterized as “much more of a health-care story” by Bassett, with 41 out of 243 new companies joining the small-cap index falling under the health care sector.
Following the rebalancing, the health care sector’s weight is expected to increase from 14.7% to 16.7%, making it the second-largest position behind industrials in the Russell 2000, according to FTSE. In terms of performance, the Russell 1000 has gained 13.9% so far in 2024, while the Russell 2000 is up by half a percent. It is important to note that these trends and predictions are subject to change and come with inherent risks and uncertainties.