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How are funds chosen for the Russell 1000 Index?

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Quick Answer

Funds are chosen for the Russell 1000 Index from a combination of their current index membership and market cap. The index measures the large-cap segment of U.S. equity performance, reports Russell.com.

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Full Answer

The Russell 1000 Index is a subset of the Russell 3000 Index. It includes 1,000 of the largest securities. The Russell 1000 represents 92 percent of the U.S. market as of 2015. The index provides an unbiased, complete measurement for the large-cap segment. It is reconstituted yearly to reflect new equities.

To be chosen for the Russell 1000 Index, a company must be one of the 1,000 largest companies in the entire U.S. equity market. The index is a market capitalization-weighted index, which means that these 1,000 largest companies constitute the index's largest percentages. These combined companies affect performance more than all the smallest index members. Many institutional managers use the Russell 1000 as the barometer for large-cap investments, favoring it over the Dow Jones Industrial Average or Standard & Poor's 500 Index, according to Investopedia.com.

As of September, 2015, the top 10 holdings on the Russell 1000 Index are:

  • Apple Inc.
  • Microsoft Corp.
  • Exxon Mobil Corp.
  • Johnson & Johnson
  • General Electric Co.
  • Berkshire Hathaway Inc.
  • Wells Fargo & Co.
  • JPMorgan Chase & Co.
  • AT&T Inc.
  • Procter & Gamble Co.
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