Stock Picker Headache as Russell Gauges Hit Record Concentration

This year’s annual rebalancing of the FTSE Russell’s stock indexes, when companies are added or kicked out of the equity gauges, will be a headache for active portfolio managers.

The reconstitution will increase the concentration of the top 10 largest companies in the large-cap Russell 1000 Index (ticker RIY) to a historical high of 29%, according to data from Wells Fargo & Co. That will effectively increase the relative tech underweight for most active managers, who are already struggling to keep pace with the megacap-driven gains in the broad equity benchmarks.

“This creates a bit more risks for active ...