Russell/Nomura Japan Equity Indexes add 38 new firms in annual reconstitution

The family of Russell/Nomura Indexes, which captures 98% of the float-adjusted market capitalization of the Japanese equity market, added 38 new firms as part of the annual reconstitution process on December 1, announced Nomura Securities Co., Ltd. and Russell Investments. The membership list was posted on http://qr.nomuraholdings.com/en/frcnri/index.html.

The turnover ratios of Total Value and Total Growth decreased to their lowest levels since 1990.

The total number of firms in the Russell/Nomura Total Market Index increased by 108 to 1,500. While 37 firms were eliminated from the Index, there were 145 additions, 38 of which were included in the Index for the first time. The total capitalization of the Index slightly increased from 291.9 trillion yen to 296.3 trillion yen (as of October 15, 2014, float-adjusted).

The number of constituents in the Large Cap Index, which contains the top 85% of the Russell/Nomura Total Market Index based on market capitalization, increased by 50 to 350. The number of stocks in the Small Cap Index, which represents the bottom 15% of the Total Market Index, also increased by 58 to 1,150.

The Total Value Index had 89 deletions and 155 additions, while the Total Growth Index had 86 deletions and 207 additions. The capitalization turnover ratios for the Value and Growth Indexes both decreased to 11.7%, their lowest level since 1990. In terms of sector concentration, “Transportation equipment” is now tilted toward Value while “Foods, Chemicals, and Information & Communication” are tilted toward Growth.

Russell/Nomura Prime Index adds 13 new companies

The Russell/Nomura Prime Index, which is a sub-index of the Russell/Nomura Japan Equity Index, was designed as a benchmark for passive management strategies for institutional investors. The Index represents all Japanese equity markets and measures the performance of Japan’s top 1,000 float-adjusted stocks. As a result of this year’s reconstitution, 13 companies entered the Index for the first time. Its total market capitalization increased slightly from 286.2 trillion yen to 289.4 trillion yen (as of October 15, 2014, float-adjusted). The turnover ratio of the Index declined to 1.5%, the lowest level in three years. Among the 13 additions overall, four stocks are added to Information & Communication sector. Other additions were spread among multiple sectors, none with more two or more new stocks.

About Russell/Nomura Japan Equity Indexes

In 1995, Russell Investments and Nomura Securities Co., Ltd. jointly developed the Russell/Nomura Japan Equity Indexes that serve to measure performance based on various investment policies. The indexes are value weighted and include only common stocks domiciled in Japan. All indexes are subsets of the Russell/Nomura Total Market Index, representing approximately 98% of the investable Japan equity market.

The Indexes are reconstituted annually on the first business day of December, in order to accurately reflect changes in the Japanese marketplace. The membership list is determined based on the float-adjusted market capitalization as of October 15 (last business day is selected if October 15 is a holiday).

Securities that leave the Russell/Nomura indexes between reconstitution dates due to mergers, acquisitions or other similar corporate activity are not replaced. Thus, the number of securities in the indexes over the year fluctuates according to corporate activity. The only additions between reconstitution dates are as a result of spin-offs and initial public offerings falling in the large segment (as determined by the latest reconstitution).

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Nomura is an Asia-based financial services group with an integrated global network spanning over 30 countries By connecting markets East & West, Nomura services the needs of individuals, institutions, corporate and governments through its three business divisions: Retail, Asset Management, and Wholesale (Global Markets and Investment Banking). Founded in 1925, the firm is built on a tradition of serving clients with creative solutions and considered thought leadership. For further information about Nomura, visit www.nomura.com.

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