The Russell Reconstitution is the period in which the index rebalances its holdings. This means that the managers of the index add some companies and drop others. It also means the weighting of companies within the index may change. Every index fund rebalances its holding. That reflects the fact that markets are always evolving. This process allows the Russell 2000 to reflect these changes.
This is a multi-week process that typically concludes in late June. The final day of the reconstitution is one of the most closely watched and anticipated events. One reason for this is that the reconstitution may impact over $9 trillion in assets that are either invested or benchmarked to the Russell Indexes. Investors can expect significant price movement in several of the index components in the period after the reconstitution.