FTSE Russell is commemorating the 40th anniversary of the Russell indexes.
Launched in 1984, the Russell indexes were established when Frank Russell consultant Kelly Haughton decided that General Motors, the firm’s newest client, should have a better benchmark than the S&P 500 index for performance measurement purposes, according to a history of the indexes on Russell’s website.
Haughton thought the S&P 500 index was not broad enough, and when considering the Wilshire 5000 index, decided that index included too many illiquid stocks as well as non-U.S. companies with listings on U.S. exchanges.
After consulting with managers of both passive and active funds, Haughton found most selected from a list of between 3,000 and 3,200 U.S. stocks, and the Russell 3000 index was born.
This was really the beginning of institutional investors being able to measure what their total investable opportunity set was, said Catherine Yoshimoto, director, product management at FTSE Russell, in an interview.
It wasn’t long before Russell’s indexes expanded far beyond that initial Russell 3000.
“Then the smallest 2,000 stocks in the Russell 3000 became the small-cap benchmark for asset managers who were calling themselves small-cap managers (because) there was no right benchmark for them,” said Yoshimoto. “Because the S&P 500 is very different from the Russell 2000, right? Even when you compare it today, you can see how different small-cap stocks behave from the large-cap stocks.”
The top 1,000 stocks in the Russell 3000 index then comprised the large-cap Russell 1000 index and new indexes within those representing growth-oriented and value-oriented were soon established as managers sought out further refinement, said Yoshimoto.
Russell’s index business, which has been owned by the London Stock Exchange since December 2014, now boasts more than 300 subindexes.
The evolution continues as managers deal with increasing market concentration within large- and megacap growth indexes that has caused some Russell U.S. style indexes to breach IRS diversification rules, leading the company to offer both capped and uncapped indexes in March 2025.
