Related Big stocks on a roll, but small stocks rock Beneficiaries include tech small stocks, which are expected to comprise a bigger portion of the widely watched small company index when investment firm Frank Russell conducts its yearly rebalancing June 30. Shares of likely candidates such as software maker MSC Software have more than doubled in the last three months, in part anticipating the rally investors have come to expect when a stock is added to the Russell 2000, fund managers and analysts said. More assets are held by managers who use the index as a benchmark for their performance. Everybody likes to beat the crowd, though. And this year in particular, investors have placed bets on potential new index members much earlier than usual.
Investors are eager to avoid the buying spree that occurs as the annual rebalancing draws near.
Typically, stocks added to the Russell 2000 would rise at the rebalancing as index managers buy or add the shares to mimic the index. Tech candidate SkillSoft, a maker of Internet-based training courses and software for corporations, has nearly doubled in the last three months. Telecoms and software will be the two largest tech groups to enter the index with 29 and 19 new names, respectively, while about 113 Internet-related stocks will drop out, according to Merrill Lynch.