Russell^® 1000 Value Index Reclassification - June 2025

FTSE Russell Equity Index Reconstitution

Russell makes changes to its equity indices on an annual basis to ensure that they represent the current equity market. Historically, this has occurred on the last Friday in June. However, starting in 2026, Russell will begin doing semi-annual reconstitutions in both June and November to improve market representation.

What to Expect on June 27, 2025

Based on preliminary securities lists, which were published by FTSE Russell on June 13, the Russell 1000^® Value Index is expected to become ‘growthy’ again as evidenced by (1) a higher allocation to both information technology and communication services and (2) the addition of three high profile companies.

The combined weight of Amazon, Alphabet and Meta in the Russell 1000® Value Index is expected to go from 0.0% to about 5.5%.

We Have Seen This Before

Let’s learn from history. Growth-oriented stocks generally underperformed in 2022. How did this impact value indices? During the reconstitution process, both Meta and Netflix, previously high-flying stocks, were added to the Russell 1000^® Value Index for the first time. This was a clear example of the value index becoming growthy. Then growth stocks rebounded in 2023 as hype around artificial intelligence (AI) got rolling. As a result, during the next reconstitution in 2023, Meta, Netflix and Alphabet were removed from the Russell 1000^® Value Index. A classic whipsaw.

The Russell reconstitution is an important dynamic for investors to monitor. We believe that a value investment should act and look like a value investment and encourage investors to look at their portfolio holdings to ensure proper diversification.

Source: The FTSE Russell reconstitution date is June 27, 2025. Preliminary index changes provide by FTSE Russell as of June 13, 2025. History of Major Additions/Drops for the Russell 1000® Value from FactSet as of the following reconstitution dates: 6/24/2022, 6/23/2023, 6/28/2024.

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The views expressed herein are those of the MFS Strategy and Insights Group within the MFS distribution unit and may differ from those of MFS portfolio managers and research analysts. These views are subject to change at any time and should not be construed as the Advisor’s investment advice, as securities recommendations, or as an indication of trading intent on behalf of MFS. No forecasts can be guaranteed.

Diversification does not guarantee a profit or protect against a loss. Past performance is no guarantee of future results.