Glossary term
FTSE Russell Index
An FTSE Russell index is a market benchmark created by FTSE Russell to track a specific group of stocks, bonds, or other securities.
Updated
Read time
What Is an FTSE Russell Index?
An FTSE Russell index is a market benchmark created by FTSE Russell to track a specific group of stocks, bonds, or other securities. These indexes are used by investors, fund companies, consultants, and researchers to measure market segments and build index-tracking products.
Well-known examples include the Russell 1000, Russell 2000, Russell 3000, FTSE 100, and other equity and fixed-income benchmarks.
Key Takeaways
- FTSE Russell indexes are benchmarks that track defined parts of the market.
- Indexes can be built around size, geography, style, sector, asset class, or other criteria.
- Many mutual funds and ETFs use FTSE Russell indexes as benchmarks or tracking targets.
- Index rules matter because they determine which securities are included and how they are weighted.
- An index is not automatically diversified for every investor's personal goals, taxes, or risk tolerance.
How FTSE Russell Indexes Work
An index provider defines rules for eligibility, weighting, rebalancing, and maintenance. For example, an index may include U.S. small-cap stocks, large U.K. companies, global bonds, or securities that meet specific factor or style definitions.
Funds can then use the index as a benchmark or attempt to track it directly. Investors often see the index in fund documents, performance comparisons, asset allocation models, and market commentary.
Common Uses
Use | How it helps |
|---|---|
Benchmarking | Compares a fund or portfolio with a defined market segment |
Index funds and ETFs | Provides the rules a passive product may try to follow |
Market analysis | Tracks how a region, size segment, or style category is performing |
Asset allocation | Helps define exposures inside a broader portfolio |
Why Investors Should Read the Index Rules
Two indexes with similar names can behave differently if their construction rules differ. Weighting method, reconstitution schedule, sector exposure, country rules, liquidity screens, and market-cap breakpoints can all affect returns and risk.
Before choosing an index fund or comparing performance, investors should understand what the benchmark actually owns and what role it is supposed to play in the portfolio.
The Bottom Line
An FTSE Russell index is a rules-based benchmark used to measure a defined market segment. It can be useful for comparison and index investing, but the details of index construction matter.