Russell Investments will reconstitute the stocks in the Russell Indexes after the closing bell today, Friday June 25. For many funds that track Russell's indexes this means there will be frantic buying and selling over the coming days.

Given the turmoil in the market over the past 12 months, analysts are looking for many familiar stocks to be jettisoned while previously unknown stocks are cast in the limelight.

Investors are most familiar with the Russell 2000 Small Cap Index (RUT). The Russell 2000 is the benchmark index for small cap investors. The Russell 2000 is also considered an important leading indicator for stock market health, since small cap stocks tend to outperform the broader market, particularly coming out of recessionary periods.

It's estimated that around $4 trillion in investment capital is benchmarked to the Russell Indexes. That means that when the Russell adds particular stock to their indexes, investment managers who track the Russell Indices must buy those stocks. This has lead analysts to conclude that more than a few unknown stocks should see significant share price appreciation in short order, meaning profits for individual investors holding them.

In 2009, stocks that were added to the Russell 2000 small cap index averaged an 8% gain the day following addition. Many of these stocks went on to post market-beating gains in the ensuing 12 months.

The SmallCapInvestor PRO advisory service has identified 3 stocks in the energy, gold and apparel industries that are virtually guaranteed to be added to the Russell 2000. 50% gains or better are expected for the stocks included in the Special Report Three Small Cap Candidates for the Russell Small Cap Index.

Click here to get your copy of this just-released Special Report

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