Definition of Reconstruction

Basically reconstitution means to form an organization or a group in a new way.

Explanation of Reconstruction

A changing or alterations made by adding and/or deleting stocks from the list of stocks that form an index. It reflects the current market capitalization and style.

The most commonly used index for reconstitution is the Russell indexes. A list of publicly traded stocks is prepared. All ineligible stocks are excluded from the index and others are ranked by market capitalization.