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Today's announcement is part of an ongoing strategic collaboration between FTSE Group, Frank Russell Company, the creator of the objective Russell Index family, and Russell/Mellon Analytical Services, which operates the Russell indices.
"The incorporation of the FTSE Global Classification System into Russell's family of US indices is great news for the global investment community," said Jane Staunton, President, FTSE Americas. "Investors who use Russell as their US benchmark can now compare these holdings with their international portfolios. It will allow asset owners and managers to better and more consistently manage their overall risk, saving time and money in the process."
"Russell indices offer investors objective, truly representative measures of the US equity market," said Lori Richards, manager, Russell indices. "By working with FTSE to align our classification methodologies, we provide the global investment community with a common standard to measure their US allocation. This alignment is an important milestone in our shared determination to deliver a clear structure for sector analysis across country boundaries."
The use of FTSE sectors allows Russell indices to employ a classification system that is not specific to a particular market, but is truly global in nature and is designed to provide the broadest coverage (more than 40,000 securities) across the world. As sectors become aligned globally, plan sponsors will have access to enhanced sector attribution analysis to make more informed investment decisions.
The 10 FTSE economic classifications now offered to Russell index clients are: resources, basic industries, general industries, cyclical consumer goods, non-cyclical consumer goods, cyclical services, non-cyclical services, utilities, financials and information technology.
"The implementation of the FTSE Global Classification system by Russell/Mellon enhances the Russell US equity index series. It's important for investors to be able to analyse their sector allocations across all regions of the world. The FTSE Global Classification System is a valuable portfolio management tool that provides an accurate, detailed and comprehensive structure to evaluate stocks and discover investment opportunities on a truly global basis," said John Davi, equity derivatives strategist at Merrill Lynch.
Today's announcement follows the July 2000 formation of a strategic collaboration between FTSE and Russell aimed at strengthening the global profile of both companies' index suites. The collaboration is expected to result in greater US penetration for FTSE's global indexes and greater European penetration for Russell's US indexes.
