Meme Stock Rally Puts Spotlight On Russell 2000 Index Reshuffle
(Bloomberg) -- A busy week for trading desks won’t end with the closing bell, at least for investors tracking FTSE Russell indexes.
The index provider is set to announce preliminary changes after the close, and the Russell 2000 will take center stage with tweaks to the gauge of small-cap companies that over the past year have become not so small. That’s because of the surge in meme stocks like AMC Entertainment Holdings Inc. and GameStop Corp.
The average stock in the 2,000-member index, at $1.7 billion in market value, has grown about 50% since the last reshuffle a year ago. AMC, now the index’s heaviest-weighted member, has a market value that’s more than four times that of Silicon Laboratories Inc., the gauge’s largest member at last year’s reshuffle. The movie-theater chain has contributed the most to the Russell 2000’s rally this year after surging 2,300%, data compiled by Bloomberg show.
Changes in sector weighting is another development to watch. Energy, which makes up less than 4% of the Russell 2000 Index, have more than doubled in value over the past year. Strategists at Jefferies expect the reshuffle to at least partly reflect that.
Today’s announcement due after the bell won’t be final, as the index provider will make tweaks to the list of additions and deletions during the next week. The changes will take effect after the market close on June 25. Russell U.S. Index membership eligibility for the 2021 reconstitution is determined from published information and market capitalizations at market close of May 7, according to the index provider. At that point, AMC was worth $4.3 billion, well below Friday’s $26 billion level.
FTSE Russell’s global stock indexes are used as benchmarks for about $16 trillion in assets, the company said in a statement during last year’s reconstitution. More than $9 trillion in investments track Russell indexes in the U.S., which include the Russell 1000 and Russell 2000.
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