Vox hits all-time high on news of inclusion in Russell indexes: Why it matters

Quotes on Vox Royalty, a Canadian small cap that operates as a gold mining royalty company, jumped more than 8% to an all-time high yesterday, May 27, after the company announced that it would join the Russell 3000, Russell 2000, and Russell Microcap indexes at the end of June. Index inclusion increases demand for stocks and boosts trading volume, as Freedom Finance Global analyst Georgiy Timoshin has previously noted.

Yesterday, Vox Royalty jumped more than 8% on the Nasdaq to close at a record high of $3.59 per share, before gaining almost 3% in after-hours trading.

Earlier in the day, the company announced that it is set to join the Russell 3000, Russell 2000, and Russell Microcap. It had been included in the preliminary list of additions for the annual reconstitution. The changes will take effect after the market close on June 27.

Vox expects index inclusion to boost its visibility among institutional investors and expand its shareholder base, CEO Kyle Floyd was quoted as saying in the press release.

Index provider FTSE Russell reconstitutes the Russell indexes once a year (starting in 2026, rebalancing will occur twice a year). The process begins in late April, when companies are ranked by market capitalization to form the broad-market Russell 3000, which covers 98% of all U.S. publicly traded equities. Then, the companies are split into subindexes: the Russell 1000 for the largest firms by market capitalization, the Russell 2000 for small and mid caps, and the Russell Microcap for the smallest names. FTSE Russell releases a preliminary list of additions in May. Changes go into effect on the last Friday in June, and the new index composition is reflected in trading starting the following Monday.

Each year, about 20% of the companies in the Russell 2000 are replaced, according to Freedom Finance Global analyst Georgiy Timoshin. He called index inclusion a key milestone for a company, as index-tracking passive funds automatically buy shares of companies in the index, boosting both demand and trading volume. It also tends to attract analyst coverage, media attention, and can be perceived as a sign of quality by some investors, Timoshin noted.

A Nasdaq study shows that on rebalancing days, trading volumes are typically six times higher than usual. Moreover, around 40% of all market-on-close buy or sell orders come from index funds versus about 5% on normal days.

In May, Freedom Broker upgraded its rating on Vox from “hold” to “buy,” with the expectation that a royalty in a new asset would enhance the company’s financial situation.

According to MarketWatch, all five analysts covering Vox have “buy” recommendations. Their average target price of $4.71 per share suggests upside of more than 31% versus the last closing price.