Russell Reshuffles 1Q IPOs Into Indexes

By Heather Bell

Although Russell Investments is known for its annual reconstitution, it does add IPOs to its indexes on a quarterly basis. At the end of the first quarter, it will add 70 initial public offerings to the Russell Global Index; 12 of them are U.S. stocks that will be included in the broad-market Russell 3000 (IWV). Please note that the additions will not replace existing components.

All 12 of the components to be added to the Russell 3000 will be included in the small-cap Russell 2000 (IWM) and the Russell Microcap Index. The Russell 2000 and the Russell Microcap Index (IWC) have overlapping coverage, so basically this means that the 12 IPOs are small, but not exactly tiny. The companies range from K12 Inc. (LRN), a provider of homeschooling curriculum and lesson plans; to Teekay Tankers Ltd. (TNK), which operates a fleet of oil tankers. Healthcare and technology are the most represented sectors, with each laying claim to three of the IPOs.

The remaining 58 components being added to the Russell Global Index represent 28 different countries. China, with its white-hot economy, will add the most companies to its broad country index, with nine IPOs joining the list. India is next, with five IPOs entering its index. Indonesia and Hong Kong are both adding four companies, while Brazil, South Korea and Singapore are each adding three. Sixteen of the 58 companies will also enter the Russell Global Large Cap Index, including three from Brazil and three from Hong Kong.

Although only one of the companies being added to the Russell 3000 falls into the energy sector, the energy and utility sectors were well-represented among the IPOs by the likes of such companies as Colombia's Ecopetrol, India's Reliance Power and Spain's Iberdrola Renovables. The combined market capitalization of energy and utility IPOs being added to the indexes is nearly $100 billion.