The Tell

U.S. stocks will soon be reshuffled in the Russell reconstitution. Here’s how Goldman Sachs sees the rebalancing shaking out.

Facebook parent Meta Platforms may see ‘the largest potential weighting increase’ in the Russell 1000 Growth index, according to Goldman Sachs

Trillions of U.S. dollars are benchmarked to Russell indexes, says Goldman Sachs.

AP/John Minchillo

Referenced Symbols

Stock-market investors are soon facing a reconstitution of  U.S. Russell indexes, an annual process resulting in the deletion and addition of companies in widely-followed benchmarks.

Almost $4 trillion of assets under management is benchmarked to major Russell indexes, which are set to be rebalanced after the stock market’s close on June 23, according to a Goldman Sachs Group research report published Monday evening.

FTSE Russell plans to release on May 19 a preliminary list of additions and deletions of companies under the annual rebalancing. Updates will be provided ahead of reconstitution day, which “typically concludes as one of the highest trading volume days of the year,” according to a FTSE Russell note posted on the firm’s website on May 15.

“Our analysis suggests 23 additions to the Russell 1000,” as well as 287 additions to the Russell 2000 and 163 deletions from the Russell 3000, the Goldman analysts said in their report.

“We estimate Info Tech will remain the largest sector in the Russell 1000 and Russell 3000,” they said. While information technology will see the largest increase in weight in the Russell 2000 index, healthcare will remain its largest sector, according to their report.

In the chart below, Goldman highlighted the potential sector weights in core Russell indexes after they’re reconstituted in June.


Goldman forecasts the 23 new stocks that may be added to the Russell 1000 RUI, +0.07% will all move up from the Russell 2000 RUT, -0.80%. Eight of them are healthcare stocks, led by Shockwave Medical Inc. SWAV, +0.75%, Apellis Pharmaceuticals Inc. APLS, -0.18%, and Prometheus Biosciences Inc. RXDX, +0.01%, according to the report. 

The Russell 1000 index, a gauge of large-cap stocks in the U.S., has risen around 7% so far this year based on Tuesday afternoon trading, according to FactSet data. By contrast, the small-cap-focused Russell 2000 index is down around 1.1% year to date, FactSet data show, at last check.

Goldman estimated that Facebook parent Meta Platforms Inc. META, +0.14% will have “the largest potential weighting increase” in the Russell 1000 Growth index with a rise to 3% from 0.6%.

Google parent Alphabet Inc. GOOGL, +0.07%, Thermo Fisher Scientific Inc. TMO, +0.57% and Salesforce Inc. CRM, +2.76% may also see their weightings increase in the index, while  T-Mobile US Inc. TMUS, +0.80% will be the biggest new addition, according to the report. 

“The largest potential weighting decrease” in the Russell 1000 Growth index may be Microsoft Corp. MSFT, +0.47%, which could fall to 11.1% from 11.7% under the reconstitution, the Goldman analysts said.

The Russell 1000 Growth index RLG, +0.26% has soared so far this year, gaining more than 16% to widely outperform value stocks in 2023, according to FactSet data, based on Tuesday afternoon trading. The Russell 1000 Value index RLV, -0.15% is down 1.6% this year, FactSet data show, at last check. 

Goldman expects Walmart Inc. WMT, +0.60% may have the largest increase in weighting in the Russell 1000 Value index as result of the annual rebalancing, potentially moving up to 2% from 1.2%, the report shows. Meanwhile, Meta and Alphabet appeared set to see the biggest decreases in weightings, as both stocks may move to “100% growth,” the analysts said.