FTSE Russell proposes moving 74% of Russell 1000 market cap to its growth index
The value index would narrow to roughly a quarter of the large-cap gauge and add price-to-sales to its screening inputs; responses are due Dec. 11.
At a glance
FTSE Russell has proposed, according to an Oct. 21 report from ETF Trends, moving about 74% of the Russell 1000's market capitalization into the growth index, up from 50% under the current methodology.
The proposal blends price-to-book with price-to-sales at equal weight.
A move from 50% to roughly 74% would leave the value index a much narrower slice of the U.S. large-cap market.
FTSE Russell has proposed, according to an Oct. 21 report from ETF Trends, moving about 74% of the Russell 1000's market capitalization into the growth index, up from 50% under the current methodology. The Russell 1000 is a gauge of the 1,000 largest U.S. stocks. Responses are due Dec. 11, 2026.
The 50/50 split has held since the Russell growth and value indices launched almost 40 years ago. Concentration is what strained it: hyperscaler technology companies dominate the growth index, so smaller growth-oriented companies overflow into the value index. The report says that reduces the potential opportunity set for growth and undermines the return profile of value.
FTSE Russell's proposed fix is a "diversification factor." In the provider's words, it would "moderate the influence of megacap companies on the style-assignment process only when concentration materially affects the representation of the underlying opportunity set."
The proposal blends price-to-book with price-to-sales at equal weight. Today, price-to-book helps classify value names, while forecasted earnings growth and five-year historical sales per share growth stand in for growth. FTSE Russell said: "Research indicates that each of the additional variables researched generally strengthened the differentiation between aggregate growth and value characteristics while continuing to represent the active manager opportunity set."
Three Europe-domiciled ETF providers track the Russell U.S. growth and value indices, and $3.4 billion of assets follow them, according to ETF Trends: BlackRock, Amundi and Vanguard. The iShares Russell 1000 Value ETF (IWD) tracks the Russell 1000 Value Index.
A move from 50% to roughly 74% would leave the value index a much narrower slice of the U.S. large-cap market. Adding price-to-sales alongside price-to-book gives the value screen a revenue-based input next to a balance-sheet one. Any adopted rule would take effect at a reconstitution, which suggests tracked funds would face turnover when membership resets. The consultation commits FTSE Russell to nothing yet; it is a request for comment, closing Dec. 11.
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