May 13, 2024

Russell Top 500 Index: A true representation of major US companies that power the globe

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  1. Overview
  2. Research and Insights

The US equity market is the largest in the world. The largest US companies like Apple, Microsoft, Amazon.com, Tesla, and Meta provide services and goods in the US and internationally. A truly representative US equity index should reflect the dynamic nature of the US economy by regularly adding and rebalancing the index to capture the investable opportunity set of innovative companies that drive the US economy and beyond.

Russell US Indexes are the product of innovative thinking by FTSE Russell since 1984. Responding to client needs and delivering practical index solutions, Russell challenged the widely used S&P 500 with the launch of the Russell 1000®, Russell 2000®, and Russell 3000® Indexes, the groundbreaking comprehensive and modular set of objective and rules-based investable US equity benchmarks. Russell US Indexes have continued to address client needs by providing additional modular size index segments.

The Russell Top 500 Index stands out in particular, as unlike the S&P 500, the Russell Top 500 Index includes the largest 500 companies in the US equity markets.

What does our research mean for investors?

This research will help investors understand the benefits of an objective, rules-based approach to US large cap equity index construction.

Points of differentiation - The Russell US Indexes have stood out by:

  • Incorporating future equity market winners up to a decade before competitor US equity indexes
  • Introducing the first free-float-adjusted equity index methodology and modular index series segmented by size in 1984
  • Being the first to offer growth and value style index segments in 1987
  • Making regular methodological enhancements to improve index usability

  • The Russell Top 500 Index stands out in particular, as unlike the S&P 500, the Russell Top 500 Index actually includes the largest 500 companies in the US equity markets. Newly listed companies are reviewed and added quarterly in March, September, and December, and together with the complete annual index reconstitution in June, the Russell Top 500 Index has included major US companies that power the global economy in a timely manner.

  • While there are many indexes available on the market, a benchmark should accurately represent the innovation and evolution of the US economy with timely inclusions of emerging companies, even those in their earlier stages of growth and not yet profitable.

    The Russell US Indexes were designed with three core principles of benchmark construction in mind:

    • Objective construction methodology
    • Modular market segmentation
    • Reliable maintenance and governance

    These features are essential to an index’s ability to effectively represent a market or market segment. Indexes that ignore these principles can undermine an index-tracking portfolio’s intended market exposure and risk/return profile. Index users should take this into consideration during the benchmark selection process in order to avoid misguided investment decisions and potential unexpected consequences.

    It is important to review the index inclusion rules for the Russell US Indexes; not any US-listed security can join the Russell Indexes, and companies must meet minimum index eligibility rules to be included. You can read more about the rules and our methodology in our paper.

Research and Insights

Research

A stronger US dollar – will EMs feel the pinch?

Structural changes in emerging markets over the last 20 years mean that they may be more resilient to the potential impacts of recent US dollar strengthening.

Research

Higher correlation of multi-asset returns

In this paper we identify key drivers of correlations in returns, using FTSE Russell multi-asset index data since 2000.

Research

Composition changes of the Russell Indexes over 40 years

The 40th anniversary of the Russell indices gives us the opportunity to review how the indices have changed over this period. In this paper we find that the indices closely mirror changes in the underlying US economy, indicating that they are representative of the broader economy.