There is a big Russell index realignment this month that is expected to boost many of our fast-growing stocks that will be added to the Russell 1,000 and 2,000 indices.
The Russell 2000 is closely watched because its focus on smaller companies makes it a useful gauge of the U.S. economy
Smaller stocks that get elevated into the Russell 2000 index can soar. The actual Russell reconstitution occurs on Monday, June 29, but Russell has been and will continue to announce its preliminary lists of stocks that it plans to add to its respective indices every Friday in June. In other words, many small-to-mid capitalization stocks will benefit from the anticipation of the institutional accumulation that occurs at the end of June when the Russell indices are rebalanced.
Due to this Russell index realignment, June has historically been a strong month for small-to-mid capitalization stocks. In fact, a couple of decades ago, my Breakthrough Stocks, on average, surged by over 6% on the day of the actual index reconstitution. Even though Russell strives to dilute its impact on stocks by releasing the stocks it tentatively wants to add to its indices in a weekly report for several weeks, during the actual day of the index realignment, June 29, I expect that many of my small-to-mid capitalization stocks will benefit from persistent institutional buying pressure.