Technology stocks will swap places with financials in this year’s Russell rebalancing, according to a Merrill Lynch report, as many tech companies formerly classified as growth stocks now appear to be value, thanks to sorry performance in 2000. The report projects tech’s weighting in the Russell 1000 growth stock index will fall nearly 11.5 percentage points, while financial weighting is expected to grow 7.3 percentage points, according to the report. The overall Russell 1000 index will see a moderate decrease of 0.5 percentage points in its tech weighting, while the financial weighting is projected to gain 0.2 percentage points.
Tech weighting in the Russell 2000 value index is expected to grow nearly 8.5 percentage points, as financial stock weighting decreases 4.4 percentage points, say report authors Steve S. Kim, Diane M. Garnick, Silvio Lotufo and John Davi. That will translate into an overall Russell 2000 index tech weighting increase of 5.1 percentage points and a financial weighting decrease of 2.9 percentage points.