Bloom and Big Bird
Index rebalancing delays can cause style drift. Even the Russell 2000 now holds an $81B company, blurring the line between small- and large-cap exposure.
Irregular rebalancing often causes style drift in indices. Occasionally, this results in holdings that are far removed from the intended asset category. As its June rebalance date draws near, the Russell 2000 Index has a size outlier as out of place as Big Bird in the boardroom meeting meme.
The index’s largest constituent, Bloom Energy, has a market cap of $81 billion.1 That accounts for 1.82% of the index,2 which is potentially a big hurdle for Russell 2000 Index fund investors looking to capture the performance of US small cap stocks.
A lot can happen in a year—the constraints enforced by index maintenance schedules can make it challenging for investors to get what they’re expecting out of index funds.
EXHIBIT 1
Russell 2000 Holdings as of May 31, 2026
Footnotes
1. Market capitalization as of May 29, 2026. Data from FactSet. With an $81 billion market cap, Bloom Energy would be the 151st largest stock in the large cap Russell 1000 Index.
2. Based on holdings for the iShares Russell 2000 Index ETF as of May 29, 2026.
Glossary
Style drift: When an investor’s portfolio deviates over time from its investment objective or targeted asset category.
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