Russell 3000 Index

The Russell 3000 Index is a broad-market U.S. equity index that tracks the performance of the 3,000 largest publicly traded companies in the United States, representing roughly 98% of the investable U.S. equity market. It serves as the parent index for the Russell 1000 (largest 1,000 stocks) and the Russell 2000 (smallest 2,000 stocks).

Key takeaways

• Covers the largest 3,000 U.S. companies and about 98% of investable U.S. equities.
• Forms the basis for the Russell 1000 (large-cap) and Russell 2000 (small-cap).
• Reconstituted annually to reflect market changes; breakpoints between size segments are reset each year.
• Investors can’t buy the index directly but can gain exposure through ETFs and index funds that track it.
• Large-cap stocks tend to dominate index performance, which can mask smaller-cap returns.

What the Russell 3000 measures

The index is designed as a broad barometer of the U.S. stock market. It includes companies across all major sectors, with large weightings typically in areas such as technology, healthcare, financials, and consumer discretionary. Because it spans companies of all sizes, it offers wider coverage than large-cap-focused indexes like the S&P 500.

Composition and holdings

• Constituents are ranked and selected based on total market capitalization (outstanding shares × market price).
• The top 1,000 companies by market cap form the Russell 1000; the remaining 2,000 form the Russell 2000.
• The index is market-cap weighted, so larger companies exert greater influence on returns.
• Recent figures show the index contains roughly 3,000 holdings and an average market-cap in the hundreds of billions to trillions for large constituents.

Reconstitution process

• FTSE Russell reconstitutes the Russell U.S. indexes annually to capture changes in the market.
• Reconstitution typically occurs at the end of June each year.
• During reconstitution, companies can be added, removed, or moved between Russell 1000, 2000, and the broader Russell 3000 based on updated market-cap rankings and other eligibility rules.
• Stocks are also classified along the value–growth spectrum during this process.

How to invest

• You cannot invest directly in an index.
• Investable options include mutual funds and ETFs that replicate the Russell 3000’s holdings or performance.
• Alternatively, investors can build a broadly diversified U.S. equity portfolio using individual stocks, but ETFs/index funds provide low-cost, passive exposure.

Comparison with other major U.S. indexes

• S&P 500: Tracks 500 large-cap companies and covers about 80% of U.S. market capitalization—narrower than the Russell 3000 but focused on large-cap representation.
• Dow Jones Industrial Average: Measures 30 large, blue-chip companies and is price-weighted rather than market-cap weighted.
• Nasdaq Composite: Includes all Nasdaq-listed stocks (often technology-heavy) and can exceed 3,000 components; differs by listing venue and sector weightings.

Challenges and limitations

• Concentration: Large-cap firms heavily influence overall performance, which can overshadow mid- and small-cap returns.
• Domestic focus: The index represents U.S. equities only, so it excludes international exposure and other asset classes.
• Update frequency: Constituent changes occur mainly at the annual reconstitution; intra-year shifts are limited, which can lag rapid market changes.

Common questions

What determines inclusion?
Inclusion is based on total market capitalization as calculated by FTSE Russell at the rank date used for annual reconstitution.

Can you buy the Russell 3000 directly?
No. Investors gain exposure via index funds or ETFs that track the Russell 3000.

How often are constituents reviewed?
The primary review and reconstitution occur once a year, with annual breakpoints updated to reflect market movements.

Conclusion

The Russell 3000 is a comprehensive U.S. equity benchmark that provides broad market coverage across large-, mid-, and small-cap companies. It is useful for investors seeking wide exposure to the U.S. stock market or for benchmarking diversified U.S. equity portfolios. For direct investment exposure, consider low-cost ETFs or index funds that replicate the index’s holdings.