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Managing the Russell Recon: A Decade of Change for Traders

Traders Magazine, June 2005

Nina Mehta

Back in the Internet craze of the late 1990's, the annual reconstitution of the Russell indexes was a traumatic ordeal. A third of the Russell 2000 small-cap index typically changed each year. As a result, index fund managers had to scramble every June to realign their portfolios. Seven or eight years ago, the reconstitution was viewed "largely as an opportunity for dealers to make a lot of money," says Doug Rivelli, director of program trading at institutional broker Weeden & Company. He adds that "indexers on the buyside traded with program desks and were happy to accept a deal that was better than the closing price because that meant they would outperform their benchmark."

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