{"id":111176,"date":"2025-03-24T15:46:44","date_gmt":"2025-03-24T19:46:44","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/markets\/beyond-capping-a-closer-look-at-growth-index-construction\/"},"modified":"2025-06-24T17:31:09","modified_gmt":"2025-06-24T21:31:09","slug":"beyond-capping-a-closer-look-at-growth-index-construction","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/markets\/beyond-capping-a-closer-look-at-growth-index-construction\/","title":{"rendered":"Beyond capping: A closer look at growth index construction"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c49f2b'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-7\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer bbg-spacer--lg\"\n    >\n<\/div><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"small\"><strong><span style=\"font-size: 14px; letter-spacing: 1px; color: #0062dd;\">ARTICLE<\/span><\/strong><\/p>\n\n<\/div>\n<div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">Beyond capping: A closer look at growth index construction<\/h1>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 50px !important\"\n    >\n<\/div>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/markets\/\" rel=\"category tag\">\n                    Markets\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/trading\/\" rel=\"category tag\">\n                    Trading\n                <\/a>\n            <\/li>\n            <\/ul>\n<\/p>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-5\"\n    style=\"\"\n    >\n    <div id=\"\" class=\"wpb_content_element bbg-single-image align-left\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"533\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/3671316251.jpg\" class=\"bbg-single-image__image attachment-full\" alt=\"Hands on keyboard\" title=\"3671316251\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/3671316251.jpg 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/3671316251.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/3671316251.jpg 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/3671316251.jpg 162w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c5753e'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-6 bbg-column--m-width-6\"\n    style=\"\"\n    >\n    <p>    <p class=\"bbg-metadata bbg-metadata--date\">March 24, 2025<\/p>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><strong>Bloomberg Professional Services<\/strong><\/p>\n\n<\/div>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2 bbg-column--valign-middle bbg-column--m-width-2 bbg-column--s-padding-right-2\"\n    style=\"\"\n    >\n    <div class=\"bb-tts\"\n\tdata-selector=\"main\"\n\tdata-label=\"Speak this page\"\n\tdata-custom-play=\"Play\"\n\tdata-custom-pause=\"Pause\"\n\tdata-custom-stop=\"Stop\"\n\tdata-overlay=\"false\"\n\tdata-invert=\"false\"\n\tdata-no-time=\"false\"\n\tdata-no-button-text=\"false\"\n\tdata-one-button=\"true\"\n\tdata-one-style=\"true\"\n\tdata-hide-stop=\"true\"\n\tdata-voice=\"Gordon\"\n\tdata-pitch=\"1\"\n\tdata-speed=\"1\"\n\tdata-align=\"flex-start\"\n>\n<\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c5ac20'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><em>This article was written by Sean Murphy, Equity Indices Product Manager at Bloomberg.<\/em><\/p>\n<p>Concentration in U.S. Equity markets has been a popular topic for quite some time, both in terms of specific names but also sectors. It has been well documented that returns over the past few years have been largely driven by only a handful of tech-oriented names such as the <a href=\"https:\/\/www.bloomberg.com\/quote\/BM7T:IND\">\u201cMagnificent 7\u201d (BM7T Index)<\/a>. As a result, the largest names in many style indices, especially on the growth side, make up a higher and higher percentage of growth benchmarks. As a result, <a href=\"https:\/\/www.lseg.com\/en\/insights\/ftse-russell\/taking-the-heat-out-of-the-us-growth-stock-surge#:~:text=Capping%20Methodology%20%E2%80%93%20From%20March%2024,to%20high%2Dperforming%20growth%20stocks.\">Russell will incorporate capping into their US Style indices<\/a> based on client feedback, which will impact the closely watched Russell 1000 Growth Index. But is capping the only way to improve diversification?<\/p>\n<p><span class=\"TextRun Highlight SCXW159011409 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\" data-ccp-charstyle-defn=\"{&quot;ObjectId&quot;:&quot;ac0262f4-8a9e-5820-b908-2d943c5f7113|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:&#091;201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Aptos&quot;,469777842,&quot;&quot;,469777843,&quot;Aptos&quot;,469777844,&quot;Aptos&quot;,201341986,&quot;1&quot;,469769226,&quot;Aptos&quot;,268442635,&quot;24&quot;,469775450,&quot;normaltextrun&quot;,201340122,&quot;1&quot;,134233614,&quot;true&quot;,469778129,&quot;normaltextrun&quot;,335572020,&quot;1&quot;,469778324,&quot;Default Paragraph Font&quot;&#093;}\">While an investor questioning concentration <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">in growth indices <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">may first look <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">to<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> how an index measures <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">stocks for <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">growth, it is important to consider the value side of the equation as well. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">Bloomberg US Equity Index <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">methodology<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> calls for <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">assign<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">ing stocks<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> to a style index based on a composite score consisting of both value and growth characteristics<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">Stocks that <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">fall on the growth end of the spectrum <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">may be exclusively assigned to the growth index; stocks<\/span> <span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">on the value side<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> may be exclusively assigned to value. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">S<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">tocks that <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">fall in the middle<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> will have their market cap <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">represented<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> in both style <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">indices<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> to varying degrees. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">While many index providers take a similar approach, <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">Bloomberg believes it is important to use multiple metrics to measure each style, as there is no fundamental metric that perfectly captures a company\u2019s profile<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">Russell <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">scores stocks <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">us<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">ing only one value metric,<\/span> <span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">price-to-book<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">Bloomberg also uses this important value metric, but it is not without its shortcomings. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\">For example, a<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-charstyle=\"normaltextrun\"> company\u2019s equity book value may not properly account for the value of intangible assets. <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\" data-ccp-parastyle-defn=\"{&quot;ObjectId&quot;:&quot;aaed607e-c2a3-5841-9fb4-41037bfa0faf|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:&#091;201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Times New Roman&quot;,469777842,&quot;Times New Roman&quot;,469777843,&quot;Times New Roman&quot;,469777844,&quot;Times New Roman&quot;,201341986,&quot;1&quot;,469769226,&quot;Times New Roman&quot;,268442635,&quot;24&quot;,469775450,&quot;paragraph&quot;,201340122,&quot;2&quot;,134233614,&quot;true&quot;,469778129,&quot;paragraph&quot;,335572020,&quot;1&quot;,335559740,&quot;240&quot;,201341983,&quot;0&quot;,134233118,&quot;true&quot;,134233117,&quot;true&quot;,469778324,&quot;Normal&quot;&#093;}\">As a result, less capital-intensive industries will often have a <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\">high<\/span> <span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\">price-to-book<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\">. The result is that using just this one metric may artificially push <\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\">such<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\"> sector<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\">s<\/span><span class=\"NormalTextRun SCXW159011409 BCX0\" data-ccp-parastyle=\"paragraph\"> even further toward the growth side when calculating the composite score.<\/span><\/span><span class=\"EOP SCXW159011409 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559731&quot;:720,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--margin-top-compact bbg-row--margin-bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c5d84b'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\tbackground: url(https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Interstitial_bg.png);\n\t\t\t\tbackground-repeat: no-repeat;\n\t\t\t\tbackground-position: center center;\n\t\t\t\tbackground-size: cover;\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:white;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_1\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Share your interests to receive Indices news, research, and event invitations directly to your inbox.<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Sign up<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_503201859815668998\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/explore\/indices-insights-tailored-to-your-interests\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c63e1a'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>One example that highlights the importance of using multiple metrics in a rules-based approach to style index creation is AbbVie, a research-based biopharmaceutical company. \u00a0AbbVie discovers and develops medicines and therapies that solve health issues across immunology, aesthetics, neuroscience, and eye care. Like many biopharmaceutical companies, AbbVie\u2019s business of identifying treatments relies on extensive research and development, which often results in new discoveries. These discoveries are then protected using patents, which if commercially viable, may allow the company to recoup some of the expenses associated with the discovery. The accounting treatment of these patents, however, may not properly account for the true value of the asset on the balance sheet, which can result in a lower equity book value.<\/p>\n<p>When compared to the broad US index using solely price-to-book, AbbVie appears very expensive, with a price-to-book ratio more than the market average (Figure 1). But when other metrics are considered, such as price-to-earnings, AbbVie has appeared fairly priced relative to the broad market, if not underpriced (Figure 1).\u00a0In the case of AbbVie, the stock was exclusively assigned to the Russell Growth Index at the end of 2023, while Bloomberg split the allocation to both the value and growth style indices.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"796\" height=\"682\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap1.jpg\" class=\"bbg-single-image__image attachment-large\" alt=\"Figure 1\" title=\"cap1\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap1.jpg 796w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap1.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap1.jpg 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap1.jpg 126w\" sizes=\"auto, (max-width: 796px) 100vw, 796px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"786\" height=\"685\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap2.jpg\" class=\"bbg-single-image__image attachment-large\" alt=\"Figure 2\" title=\"cap2\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap2.jpg 786w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap2.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap2.jpg 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap2.jpg 124w\" sizes=\"auto, (max-width: 786px) 100vw, 786px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span class=\"TextRun Highlight SCXW83863535 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\" data-ccp-charstyle-defn=\"{&quot;ObjectId&quot;:&quot;ac0262f4-8a9e-5820-b908-2d943c5f7113|1&quot;,&quot;ClassId&quot;:1073872969,&quot;Properties&quot;:&#091;201342446,&quot;1&quot;,201342447,&quot;5&quot;,201342448,&quot;1&quot;,201342449,&quot;1&quot;,469777841,&quot;Aptos&quot;,469777842,&quot;&quot;,469777843,&quot;Aptos&quot;,469777844,&quot;Aptos&quot;,201341986,&quot;1&quot;,469769226,&quot;Aptos&quot;,268442635,&quot;24&quot;,469775450,&quot;normaltextrun&quot;,201340122,&quot;1&quot;,134233614,&quot;true&quot;,469778129,&quot;normaltextrun&quot;,335572020,&quot;1&quot;,469778324,&quot;Default Paragraph Font&quot;&#093;}\">There are <\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">additional<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> differences between the Bloomberg and Russell approach.<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> Russell will assign up to 35% of the starting universe (Russell 1000) market weight exclusive<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">ly<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> to the growth index (<\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">same for<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> value, resulting in 70% of the parent universe assigned to one or the other). Bloomberg <\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">takes a different approach, assigning 30% of constituents <\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">exclusively to growth (combined with 30% exclusively to value side, <\/span><\/span><span class=\"TextRun SCXW83863535 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">with the <\/span><\/span><span class=\"TextRun Highlight SCXW83863535 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">remaining 40% found in both indices).<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> If all else were equal, this means the Bloomberg <\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">G<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">rowth index <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\">will<\/span><span class=\"NormalTextRun SCXW83863535 BCX0\" data-ccp-charstyle=\"normaltextrun\"> have more constituents. <\/span><\/span><span class=\"EOP SCXW83863535 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559731&quot;:720,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"471\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg\" class=\"bbg-single-image__image attachment-large\" alt=\"Style Index Allocation\" title=\"Style Index Allocation\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 100w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 184w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Fig-3-SIAcr.jpg 1188w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>When examining through year-end, the combination of using only one value metric alongside the higher all-growth allocation resulted in a meaningfully more concentrated Russell Growth index when compared to <a href=\"https:\/\/www.bloomberg.com\/professional\/products\/indices\/quote\/B1000GT:IND\">the Bloomberg equivalent<\/a>, both in terms of sectors and number of constituents. In examining ETFs that track the Russell 1000 Growth Index, there were less than 400 names, with the top 10 names representing over 50% of the total value. The allocation to the Tech sector alone was 48% to end 2024 (Figure 4).<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"769\" height=\"404\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap4.jpg\" class=\"bbg-single-image__image attachment-large\" alt=\"Figure 4\" title=\"cap4\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap4.jpg 769w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap4.jpg 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/cap4.jpg 192w\" sizes=\"auto, (max-width: 769px) 100vw, 769px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Bloomberg\u2019s equity index methodology strikes a balance between responsiveness, representativeness, and turnover. Our indices leverage style metrics that are backed by decades of academic research and used by style investors of all types. There is no one perfect metric, so ensuring the shortcomings of one are addressed with the benefits of others is important to ensure proper representation of an investing style. By doing so, the <a href=\"https:\/\/www.bloomberg.com\/professional\/products\/indices\/quote\/B1000GT:IND\">Bloomberg 1000 Growth<\/a> index avoids some of the short-term noise and concentration risk seen in other indices, while at the same time constructing an index that includes exposures investors expect to see.<\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c7307d'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div class=\"bbg-accordion transparent\">\n\t<input type=\"checkbox\"  id=\"bbg-accordion-toggle-6a0c2d9c749a5\">\n\t<div class=\"bbg-accordion-parent\" data-accordion-toggle aria-expanded=\"false\">\n\t\t<label class=\"bbg-accordion-label\" for=\"bbg-accordion-toggle-6a0c2d9c749a5\">\n\t\t\t\t<h5 class=\"bbg-accordion-title\" data-label=\"Disclaimer\">\n\t\tDisclaimer\n\t<\/h5>\n\n\t\t\t\t\t<\/label>\n\t<\/div>\n\t<div class=\"bbg-accordion-content\">\n\t\t<div class=\"bb-wysiwyg\">\n\t<p>The data and other information included in this publication is for illustrative purposes only, available \u201cas is\u201d, non-binding and constitutes the provision of factual information, rather than financial product advice.\u00a0 BLOOMBERG and BLOOMBERG INDICES (the \u201cIndices\u201d) are trademarks or service marks of Bloomberg Finance L.P. (\u201cBFLP\u201d). BFLP and its affiliates, including BISL, the administrator of the Indices, or their licensors own all proprietary rights in the Indices. Bloomberg L.P. (\u201cBLP\u201d) or one of its subsidiaries provides BFLP, BISL and its subsidiaries with global marketing and operational support and service. Certain features, functions, products and services are available only to sophisticated investors and only where permitted. Bloomberg (as defined below) does not approve or endorse these materials or guarantee the accuracy or completeness of any information herein, nor does Bloomberg make any warranty, express or implied, as to the results to be obtained therefrom, and, to the maximum extent allowed by law, Bloomberg shall not have any liability or responsibility for injury or damages arising in connection therewith. Nothing in the Services or Indices shall constitute or be construed as an offering of financial instruments by Bloomberg, or as investment advice or investment recommendations (i.e., recommendations as to whether or not to \u201cbuy\u201d, \u201csell\u201d, \u201chold\u201d, or to enter or not to enter into any other transaction involving any specific interest or interests) by Bloomberg. Information available via the Index should not be considered as information sufficient upon which to base an investment decision. All information provided by the Index or in this publication is impersonal and not tailored to the needs of any person, entity or group of persons. Absence of any trademark or service mark from this list does not waive Bloomberg\u2019s intellectual property rights in that name, mark or logo.\u00a0 For the purposes of this publication, Bloomberg includes BLP, BFLP, BISL and\/or their affiliates.<\/p>\n<p>BISL is registered in England and Wales under registered number 08934023 and has its registered office at 3 Queen Victoria Street, London, England, EC4N 4TQ. BISL is authorized and regulated by the Financial Conduct Authority as a benchmark administrator.<\/p>\n<p>\u00a9 2025 Bloomberg. All rights reserved.<\/p>\n\n<\/div>\n\n\n\t<\/div>\n<\/div>\n\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <style>section[data-anchor=row-6a0c2d9c762d7]::before {\n\t\t\t\tbackground-color: #f4f4f9;\n\t\t\t}<\/style>\n    <section class=\"bbg-row bg--custom-color  bg--f4f4f9 text--black bbg-row--full-bg-bleed\" data-anchor='row-6a0c2d9c762d7'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h3>Related Content<\/h3>\n\n<\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-4 bbg-column--halign-right\"\n    style=\"\"\n    >\n    \n<div\n  id=\"cta_1818845936800757130\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link 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