Growth, Value or Both? What the 2026 Russell Reconstitution Means for Investors

15 JUNE 2026

The Author

Top

Download

Each June, the Russell Index Reconstitution quietly reshapes the U.S. equity landscape. While it rarely generates headlines outside institutional circles, it can have meaningful implications for portfolio positioning, passive fund flows and investor rebalancing. This year's changes are particularly noteworthy across several equity segments.

While the changes to Russell Indexes will not take effect until June 26, 2026, FTSE Russell has released preliminary data that allows us to estimate their magnitude. The process systematically evolves the indexes—against which trillions of dollars are managed—to better reflect the investment universe. It involves redistributing companies by both market capitalization and style (growth versus value), as highlighted below.

Market Capitalization Reset
FTSE Russell is well known for its market capitalization indexes, which serve as benchmarks for large-cap, mid-cap, small-cap, and micro-cap strategies and portfolios. With the Russell 3000 Index up 29% over the 12 months through May, many companies have seen significant shifts in market capitalization and may no longer fit their current index assignments. According to FTSE Russell, the maximum cutoff for the small-cap Russell 2000 Index will be $5.7 billion. As of the end of May, 45 companies in the Russell 2000 Index had market capitalizations above $10 billion, and seven exceeded $20 billion, including Bloom Energy at $81 billion. In addition, the maximum for the Russell Mid-Cap Index will be set at $61.7 billion.

The Growth-Value Divide Blurs
For investors accustomed to viewing growth and value as distinct styles, this year’s reconstitution reinforces that today's market leaders no longer fit neatly within this framework, with many stocks no longer clearly aligned to a single style.

Historically, growth stocks have traded at premium valuations and delivered higher revenue and earnings growth, while value stocks have been viewed as more mature businesses trading at lower valuation multiples.

This year’s reconstitution highlights that many of the market's largest companies now exhibit characteristics of both styles, while others are seeing their business prospects and valuations reshaped by the artificial intelligence buildout. Many investors continue to view mega-cap technology companies as purely growth exposures. Yet many of these firms now pay dividends and no longer trade at stretched valuations. Meanwhile, some previously cyclical, low-valuation companies are experiencing rapid growth driven by AI infrastructure buildout.

The Magnificent Seven: No Longer Pure Growth
Perhaps the most significant takeaway from this year's reconstitution is that the Magnificent Seven (Apple, Microsoft, Amazon, Alphabet, Meta, NVIDIA and Tesla) are increasingly difficult to characterize as purely growth-oriented investments.

The June 2025 reconstitution began this trend, as minority portions of Amazon.com, Meta Platforms, and Alphabet were added to the Russell 1000 Value Index. This year, however, that trend has accelerated, with the Russell 1000 Value Index now holding meaningful weights in traditionally prominent “growth stocks.” Investors allocating separately to growth and value strategies may find that they own many of the same companies across both exposures.

Microsoft and Apple have shifted from exclusively Growth Index constituents to top-six holdings in both Growth and Value indexes, while Amazon is expected to be the largest holding in the Russell 1000 Value Index after previously being almost exclusively in Growth. By contrast, Alphabet is expected to move from a small Value allocation to fully allocated to the Growth Index. The expected post-reconstitution allocation of the Magnificent Seven is shown below. These stocks are no longer exclusively the domain of growth investors and may see broader adoption among value managers, given their 17% weight in the Russell 1000 Value Index.

Index Weighting of the Magnificent Seven

Source: TD Securities, FactSet, MSIM.

*Estimated post-reconstitution weights based on preliminary data.

For illustrative purposes only. It is not possible to invest directly in an index.

The views and opinions expressed are those of the team at the time of writing this insight and are subject to change at any time due to market, economic or other conditions, and may not necessarily come to pass. Forecasts/estimates

are based on current market conditions, subject to change, and may not necessarily come to pass.

Rising Concentration in the Russell 1000 Value Index
As some of the largest technology companies migrate into the Russell 1000 Value Index, the index is becoming significantly more concentrated in a smaller number of stocks. Investors should recognize that Value Indexes may now behave differently than in the past. Technology-related earnings and market sentiment could exert a greater influence on value performance than in prior cycles.

The largest constituents in the Russell 1000 Value Index represent an increasing share of index weight, meaning a relatively small number of companies can drive a substantial portion of returns. This phenomenon, which has impacted the Russell 1000 Growth and S&P 500 indexes during the last several years, has now spread to the Russell 1000 Value Index.

Russell 1000 Value Index May 31 2025

Source: TD Securities, FactSet

Russell 1000 Value Index June 26 2026 (pro forma)*

Source: TD Securities, MSIM.

*Estimated post-reconstitution weights based on preliminary data.

For illustrative purposes only. It is not possible to invest directly in an index.

The views and opinions expressed are those of the portfolio management team at the time of writing this insight and are subject to change at any time

due to market, economic or other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass.

In addition, the distinction between broad market exposure and style exposure continues to diminish. As the same mega-cap companies dominate both market-cap-weighted benchmarks and style indexes, portfolio diversification may be less robust than headline allocations suggest.

What This Means for Investors
The Russell reconstitution is more than a technical exercise. It provides a window into how corporate fundamentals and the broader U.S. equity market are evolving. The magnitude of this year’s reconstitution underscores the significant changes taking place. As the line between growth and value continues to blur, it remains critical for investors to evaluate underlying holdings and exposures, and not just their labels or benchmarks. In today's market, understanding underlying holdings matters more than labels or style classifications.

The Author

Featured Insights

Article

Growth, Value or Both? What the 2026 Russell Reconstitution Means for Investors

FTSE Russell’s 2026 reconstitution highlights major shifts in market-cap cutoffs, blurred lines between growth and value, and rising concentration in value indexes. With mega-cap tech names appearing across style benchmarks, investors may be less diversified than labels suggest. The takeaway: look beyond index names and focus on underlying holdings.

15-Jun-2026

Media Advisory

The Barron’s 10 Most Sustainable Companies of 2026 with Calvert Research and Management

Calvert Research and Management developed its 9th annual ranking of the Barron’s Most Sustainable U.S. Companies by analyzing the 1,000 largest U.S. publicly traded companies, evaluating them across more than 230 key performance indicators and whittling them down to 10.

11-Jun-2026

Press Release

Morgan Stanley Real Estate Investing Acquires Mission-Critical Defense Manufacturing Facility in Greater Boston

Morgan Stanley Investment Management, through investment funds managed by Morgan Stanley Real Estate Investing (MSREI), announced today the acquisition of a 300,000-square-foot mission-critical defense manufacturing facility located in Taunton, MA, approximately 40 miles south of Boston. The property is subject to a long-term absolute triple net lease with a leading defense contractor.

11-Jun-2026

Big Picture

Big Picture - Artificial Intelligence: Ten Investment Truths

Three years ago, artificial intelligence was a topic of mere curiosity, but today is the subject of capital allocation. The challenge for investors is not only understanding that AI is consequential, but building frameworks precise enough to act on. Jitania Kandhari explains.

10-Jun-2026

For illustrative purposes only. Not a recommendation to buy or sell any security. It is not possible to invest directly in an index. The views and opinions expressed are those of the portfolio management team at the time of writing this insight and are subject to change at any time due to market, economic or other conditions, and may not necessarily come to pass. Forecasts/estimates are based on current market conditions, subject to change, and may not necessarily come to pass. Past performance is not indicative of future results and does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes In general, equity securities’ values fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, and market risks.

Risk Considerations
There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and that the value of portfolio shares may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. Asset Allocation/Diversification does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes In general, equity securities’ values fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, and market risks.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required.

For important information about the investment managers, please refer to Form ADV Part 2.

The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively “the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors or the investment team. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific strategy or product the Firm offers. Future results may differ significantly depending on factors such as changes in securities or financial markets or general economic conditions.

This material is for the benefit of persons whom the Firm reasonably believes it is permitted to communicate to and should not be forwarded to any other person without the consent of the Firm. It is not addressed to any other person and may not be used by them for any purpose whatsoever. It expresses no views as to the suitability of the investments described herein to the individual circumstances of any recipient or otherwise. It is the responsibility of every person reading this material to fully observe the laws of any relevant country, including obtaining any governmental or other consent which may be required or observing any other formality which needs to be observed in that country. Unless otherwise stated, returns and market values contained herein are presented in US Dollar.

This material is a general communication, which is not impartial and all information provided has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

The Firm does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Each Jurisdiction tax laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.

Charts and graphs provided herein are for illustrative purposes only. Past performance is no guarantee of future results.

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index.

This material is not a product of Morgan Stanley’s Research Department and should not be regarded as a research material or a recommendation.

The Firm has not authorised financial intermediaries to use and to distribute this material, unless such use and distribution is made in accordance with applicable law and regulation. Additionally, financial intermediaries are required to satisfy themselves that the information in this material is appropriate for any person to whom they provide this material in view of that person’s circumstances and purpose. The Firm shall not be liable for, and accepts no liability for, the use or misuse of this material by any such financial intermediary.

This material may be translated into other languages. Where such a translation is made this English version remains definitive. If there are any discrepancies between the English version and any version of this material in another language, the English version shall prevail.

The whole or any part of this material may not be directly or indirectly reproduced, copied, modified, used to create a derivative work, performed, displayed, published, posted, licensed, framed, distributed or transmitted or any of its contents disclosed to third parties without the Firm’s express written consent. This material may not be linked to unless such hyperlink is for personal and non-commercial use. All information contained herein is proprietary and is protected under copyright and other applicable law.

Eaton Vance, Atlanta Capital, Parametric and Calvert are part of Morgan Stanley Investment Management. Morgan Stanley Investment Management is the asset management division of Morgan Stanley.

This material has been prepared on the basis of publicly available information, internally developed data and other third-party sources believed to be reliable. However, no assurances are provided regarding the reliability of such information and the Firm has not sought to independently verify information taken from public and third-party sources.

DISTRIBUTION
This material is only intended for and will only be distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

MSIM, the asset management division of Morgan Stanley (NYSE: MS), and its affiliates have arrangements in place to market each other’s products and services. Each MSIM affiliate is regulated as appropriate in the jurisdiction it operates. MSIM’s affiliates are: Calvert Research and Management, Eaton Vance Management, Parametric Portfolio Associates LLC, Parametric SAS, and Atlanta Capital Management LLC.

This material has been issued by any one or more of the following entities:

EMEA
This material is for Professional Clients/Accredited Investors only.

In the EU, MSIM materials are issued by MSIM Fund Management (Ireland) Limited (“FMIL”). FMIL is regulated by the Central Bank of Ireland and is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at 24-26 City Quay, Dublin 2, DO2 NY19, Ireland.

Outside the EU, MSIM materials are issued by Morgan Stanley Investment Management Limited (MSIM Ltd) is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No. 1981121. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA.

In Switzerland, MSIM materials are issued by Morgan Stanley & Co. International plc, London (Zurich Branch) Authorised and regulated by the Eidgenössische Finanzmarktaufsicht ("FINMA"). Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland.

Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. France: MSIM FMIL (Paris Branch), 61 rue de Monceau 75008 Paris, France. Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain. Germany: MSIM FMIL Frankfurt Branch, Große Gallusstraße 18, 60312 Frankfurt am Main, Germany (Gattung: Zweigniederlassung (FDI) gem. § 53b KWG). Denmark: MSIM FMIL (Copenhagen Branch), Gorrissen Federspiel, Axel Towers, Axeltorv2, 1609 Copenhagen V, Denmark.

MIDDLE EAST
Dubai International Financial Centre: This information does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase, any securities or investment products in the UAE (including the Dubai International Financial Centre and the Abu Dhabi Global Market) and accordingly should not be construed as such. Furthermore, this information is being made available on the basis that the recipient acknowledges and understands that the entities and securities to which it may relate have not been approved, licensed by or registered with the UAE Central Bank, the Dubai Financial Services Authority, the UAE Securities and Commodities Authority, the Financial Services Regulatory Authority or any other relevant licensing authority or government agency in the UAE. The content of this report has not been approved by or filed with the UAE Central Bank, the Dubai Financial Services Authority, the UAE Securities and Commodities Authority or the Financial Services Regulatory Authority.

Abu Dhabi Global Market ("ADGM"): This material is sent strictly within the context of, and constitutes, an Exempt Communication. This material relates to the strategy which is not subject to any form of regulation or approval by the Financial Services Regulatory Authority of the Abu Dhabi Global Market (the “FSRA”).

Saudi Arabia
This financial promotion was issued and approved for use in Saudi Arabia by Morgan Stanley Saudi Arabia, Al Rashid Tower, Kings Sand Street, Riyadh, Saudi Arabia, authorized and regulated by the Capital Market Authority license number 06044-37.

U.S.

NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | NOT A DEPOSIT

Latin America (Brazil, Chile Colombia, Mexico, Peru, and Uruguay)

This material is for use with an institutional investor or a qualified investor only. All information contained herein is confidential and is for the exclusive use and review of the intended addressee, and may not be passed on to any third party. This material is provided for informational purposes only and does not constitute a public offering, solicitation or recommendation to buy or sell for any product, service, security and/or strategy. A decision to invest should only be made after reading the strategy documentation and conducting in-depth and independent due diligence.

ASIA PACIFIC
Hong Kong: This document has been issued by Morgan Stanley Asia Limited, CE No. AAD291, for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this document have not been reviewed nor approved by any regulatory authority including the Securities and Futures Commission in Hong Kong. Accordingly, save where an exemption is available under the relevant law, this document shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. Singapore: This material is disseminated in Singapore by Morgan Stanley Investment Management Company, Registration No. 199002743C. This material should not be considered to be the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor under section 304 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a “relevant person” (which includes an accredited investor) pursuant to section 305 of the SFA, and such distribution is in accordance with the conditions specified in section 305 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This material has not been reviewed by the Monetary Authority of Singapore. Australia: This material is provided by Morgan Stanley Investment Management (Australia) Pty Ltd ABN 22122040037, AFSL No. 314182 and its affiliates and does not constitute an offer of interests. Morgan Stanley Investment Management (Australia) Pty Limited arranges for MSIM affiliates to provide financial services to Australian wholesale clients. This material will not be lodged with the Australian Securities and Investments Commission.

Japan
For professional investors, this material is circulated or distributed solely for informational purposes. For non-professional investors, this material is provided in connection with Morgan Stanley Investment Management (Japan) Co., Ltd. (“MSIMJ”)’s business with respect to discretionary investment management agreements (“IMA”) and investment advisory agreements (“IAA”). This does not constitute a recommendation or solicitation of transactions nor offers any particular financial instruments. Under an IMA, with respect to the management of client assets, the client prescribes basic management policies in advance and commissions MSIMJ to make all investment decisions based on an analysis of the value, etc. of the securities, and MSIMJ accepts such commission. The client shall delegate to MSIMJ the authorities necessary to make such investment decisions. MSIMJ exercises these delegated authorities accordingly, and the client shall not make individual instructions. All investment profits and losses belong to the clients; principal is not guaranteed. Please consider the investment objectives and nature of risks before investing. As an investment advisory fee for an IAA or an IMA, the amount of assets subject to the contract multiplied by a certain rate (the upper limit is 2.20% per annum (including tax)) shall be incurred in proportion to the contract period. For some strategies, a contingency fee may be incurred in addition to the fee mentioned above. Indirect charges also may be incurred, such as brokerage commissions for underlying securities. Since these charges and expenses vary by contract and other factors, MSIMJ cannot present the rates, upper limits, etc. in advance. All clients should read thoroughly the Documents Provided Prior to the Conclusion of a Contract carefully before executing an agreement. This material is distributed in Japan by MSIMJ, Registered No. 410 (Director of Kanto Local Finance Bureau (Financial Instruments Firms)), Membership: the Japan Securities Dealers Association, the Investment Management Association of Japan and the Type II Financial Instruments Firms Association.