Russell Indexes to Reclassify Greece From Developed to Emerging Market Country at Upcoming Annual Index Reconstitution

  • Change is a result of Russell Indexes market risk review process
  • Shift driven by rules-based, objective analysis of macro & operational risk
  • Becomes effective at conclusion of Russell Indexes annual reconstitution in late June

SEATTLE--()--Russell Investments today announced the 2013 schedule for its annual index reconstitution process, designed to capture and reflect global equity market shifts to ensure that multi-asset investors continue to have the most accurate proxy for global markets.

One important change at this year’s reconstitution is that country constituent Greece will be reclassified from a developed to an emerging market country. This conclusion by Russell Indexes results from a three-year market risk review process, as prescribed by Russell’s methodology, in which Greece did not meet macro- and operational risk criteria for developed market status, but did meet classification criteria for inclusion in emerging markets. Russell’s country classifications are announced each year in March and any changes become effective at the conclusion of its annual index reconstitution process in late June.

"Our analysis of Greece and conclusion to reclassify its market status has been guided by the rules-based, objective and transparent methodology for Russell Global Indexes,” said Russell Indexes senior research analyst Mat Lystra. “Having a clear road map to follow and the global resources to carry out the level of ongoing analysis needed to evaluate Greece against the same risk and efficiency criteria among all countries in the Russell family of global indexes has been extremely helpful in this process.”

The Russell Index reconstitution process includes an intensive review of numerous market factors, as outlined in the Russell Index methodology, to recalibrate the indexes each year to reflect current market conditions. As part of the reconstitution, Russell Indexes analyzes risk factors and country classifications as part of a dynamic, long-term market risk review designed to identify material changes to the risk and investability characteristics of countries included in the Russell family of global indexes. While reclassifications are rare, they do occur if a country no longer meets the criteria for its current classification. It takes three years of sustained changes in economic criteria for a country to be reclassified, and reclassification can happen in different ways. A frontier or emerging market country can advance to emerging or developed status, while a developed or emerging market country can shift to emerging or frontier. Russell’s methodology requires developed markets, in general, to be the least risky and most efficient in which to trade, with emerging and frontier markets progressively more risky and less efficient along the spectrum.

According to its transparent, rules-based process, Russell will post lists of preliminary additions and deletions to the Russell Global Index, U.S. broad market Russell 3000® Index and Russell Microcap® Index on its website after the U.S. market close on Friday, June 14th, 2013. Updated lists, if necessary, will be posted at the same location on June 21st and June 28th. Membership changes to Russell’s comprehensive family of global market indexes take effect as the markets close on Friday, June 28th.

2013 Russell Indexes Reconstitution Schedule
June 14th   Preliminary list of additions and deletions for the Russell 3000®, Russell Microcap® and Russell Global Indexes
June 21st   Preliminary membership updates
June 28th   Final additions and deletions
July 1st   Final List posted for Russell Global Indexes and leading U.S. benchmarks Russell 1000®, Russell 2000®, Russell 3000®, Russell Midcap® and Russell Microcap® Indexes.

Lystra provides more background on the analysis which led to the reclassification of Greece to an emerging market in a paper entitled Greece: Re-emerged and a video, available on the Russell Indexes website.

About Russell Investments

Russell Investments (Russell) is a global asset manager and one of only a few firms that offer actively managed multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell’s core capabilities extend across capital markets insights, manager research, portfolio construction, portfolio implementation and indexes.

Russell has about $163 billion in assets under management (as of 12/31/2012) and works with 2,400 institutional clients and more than 580 independent distribution partners globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 12/31/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.5 trillion in 2011 through its implementation services business. Russell calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, 83 countries and more than 10,000 securities. Approximately $3.9 trillion in assets are benchmarked to the Russell Indexes.

Russell is headquartered in Seattle, Washington, USA, Russell has offices in Amsterdam, Auckland, Beijing, Chicago, Dubai, Frankfurt, London, Melbourne, Milan, New York, Paris, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Russell Investments is the owner of the trademarks, service marks and copyrights related to its respective indexes. Russell’s indexes are unmanaged and cannot be invested in directly.

Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

CORP-8290

Contacts

Intermarket
Michael Gelormino, 212-909-4780
mgelormino@intermarket.com
or
Russell Investments
Tim Benedict, 212-702-7823; 646-398-4528
TBenedict@russell.com

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Russell Indexes: Greece Reclassification

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Contacts

Intermarket
Michael Gelormino, 212-909-4780
mgelormino@intermarket.com
or
Russell Investments
Tim Benedict, 212-702-7823; 646-398-4528
TBenedict@russell.com