Russell Small Cap Completeness Index

What Is the Russell Small Cap Completeness Index?

The Russell Small Cap Completeness Index is a market-capitalization-weighted index contained Russell 3000 stocks that are excluded from the Standard and Poor's 500 Index. Building it in this manner furnishes investors with a broad basket of small-and mid-cap assets that are uncorrelated to widely owned stocks like Apple (AAPL) and Amazon (AMZN). Every year, FTSE Russell reconstitutes the index to eliminate companies recently eligible for the S&P 500. This guarantees the index stays uncorrelated to the broader market and limits misfortunes in the event of a downturn.

How the Russell Small Cap Completeness Index Works

The Russell Small Cap Completeness Index ranges in size; the largest company holds a market cap of about $104 billion while the average company remains at $1.3 billion. A huge portion of the holdings operate in financial services, consumer discretionary, and technology sectors. Furthermore, dissimilar to most different indexes, a large portion of price still up in the air by every sector. As a matter of fact, a portion of the top holdings incorporate Uber (UBER), Square (SQ), and Spotify (SPOT), every one of which carries on with work outside of the tech sector.

Adding the Russell Small Cap Completeness Index to a portfolio normally requires purchasing an exchange-traded fund (ETF). As of December 2020, the index beat the Russell 3000 north of one-, three-, and five-year time spans. Year-to-date shares are at around 5%, surpassing the benchmark index by almost 4%.

Advantages of the Russell Small Cap Completeness Index

The benefits of investing in assets uncorrelated to the broader market can't go downplayed. It offers investors more diversification and a means to safeguard against downside risk. Building a portfolio with uncorrelated assets likewise permits the movement of one asset to partially offset a decline in another, subsequently lessening the average volatility of a portfolio. This is a fundamental method to reduce large varieties between companies, also called unsystematic or diversification risk. Here and there buying uncorrelated assets doesn't bring about a triumphant situation. In the event of a systemic crisis, comparable with the recent recession, most assets are presented to a large amount of volatility.

One more advantage of this approach incorporates an opportunity to capture returns from beating assets and reinvest the profits in the underperformers. The Russell Small Cap Completeness Index and different assets like it act as a wake up call that uncorrelated returns can safeguard a portfolio when large-cap stocks tumble.

Features

• The Russell Small Cap Completeness Index incorporates small-cap and mid-cap stocks that are in the broad Russell 3000 Index however that are not part of the S&P 500.
• Investors can purchase the index through ETFs that track it.
• By possessing the Completeness Index plus the S&P 500, investors gain admittance to a wide pattern of stocks that don't overlap.