The Russell 3000 is a market-capitalization-weighted index that tracks the performance of the 3,000 largest publicly traded companies in the US. It is designed to represent the entire US stock market, covering approximately 98% of the market’s total capitalization.
Russell 3000 vs. Russell 2000 vs. Wilshire 5000
The Russell 3000 is best understood as a family. It holds the 3,000 largest publicly traded U.S. companies, covering about 98 percent of the country’s stock market value. The top 1,000 of those form the Russell 1000, the large-cap index, which alone covers roughly 92 percent of the market. The remaining 2,000 form the Russell 2000, the standard benchmark for small-cap U.S. stocks. When people say “small caps are lagging,” the Russell 2000 is usually the scoreboard they mean.
The Wilshire 5000 is the broader cousin. Despite the name, it holds around 3,400 to 3,500 stocks, every investable U.S. company with readily available price data, and it is the closest thing to a true total-market index. In practice the Russell 3000 and the Wilshire 5000 perform almost identically, because the extra micro-caps in the Wilshire are too small to move the needle. All three indexes are market-cap weighted, meaning the biggest companies drive the returns: Apple, Microsoft, and Nvidia matter far more to any of these indexes than the 2,900th holding does.
One more detail worth knowing: FTSE Russell rebuilds the indexes once a year, at the end of June, in an event called reconstitution. Companies that grew get promoted from the 2000 to the 1000, companies that shrank get demoted, and IPOs get added. Index funds tracking these benchmarks have to buy and sell accordingly, which is why the last trading days of June see unusually heavy volume in small-cap stocks.
Key Features
- Market-Capitalization-Weighted: The Russell 3000 is weighted by market capitalization, meaning that the largest companies have a greater influence on the index’s performance.
- Comprehensive Coverage: The index covers a wide range of industries and sectors, providing a broad view of the US stock market.
- Reconstituted Annually: The Russell 3000 is reconstituted annually to ensure that it remains representative of the US stock market.
How is the Russell 3000 Calculated?
The Russell 3000 is calculated using a market-capitalization-weighted methodology. The index is rebalanced annually to ensure that it remains representative of the US stock market.
What are the Benefits of the Russell 3000?
- Comprehensive View: The Russell 3000 provides a comprehensive view of the US stock market, covering a wide range of industries and sectors.
- Benchmarking: The index is widely used as a benchmark for investment performance, allowing investors to compare their portfolios to the broader market.
- Research: The Russell 3000 is used by researchers and analysts to study the US stock market, including its performance, volatility, and other characteristics.
How Does the Russell 3000 Compare to Other Indices?
- S&P 500: The Russell 3000 is often compared to the S&P 500, which is a more narrow index that only includes the 500 largest publicly traded companies in the US.
- Dow Jones Industrial Average: The Russell 3000 is also compared to the Dow Jones Industrial Average, which is a price-weighted index that tracks the performance of 30 large-cap companies.
The Russell 3000 is a widely followed stock market index that provides a comprehensive view of the US stock market. Its market-capitalization-weighted methodology and annual rebalancing ensure that it remains representative of the market. By understanding the Russell 3000, investors can gain insights into the US stock market and make more informed investment decisions.
How to actually own it
You cannot buy an index directly, but you can buy a fund that tracks it for a tiny fee. The iShares Russell 3000 ETF (ticker: IWV) follows this exact index, and Vanguard’s total-market funds cover essentially the same ground under a different benchmark. For most investors the choice between the Russell 3000, the S&P 500, and a total-market fund matters far less than the expense ratio charged to own it. The whole point of a broad-market index is to stop betting on which slice of the market wins and own all of it instead.
Winchell House 
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