The previous four indexes we covered were all based on the top companies in the U.S., most of them worth billions of dollars. The Russell 2000 measures the performance of smaller stocks (small caps) that are often excluded from the big indexes. The average market capitalization in the Russell 2000 is approximately $530 million. To put that into perspective, Microsoft alone has a market capitalization of more than $248 billion at the time of this writing.
|Created By:||Frank Russell Company in 1984|
|Number of Companies:||~ 2,000|
|Types of Companies:||Small cap companies from various industries. Exclusions are stocks under $1 and pink sheets.|
|Selection Criteria:||This index consists of the smallest 2,000 companies in the Russell 3000 index.|
|How it\'s Calculated:||The Russell 2000 is weighted on market capitalization.|
|Advantages: A well-diversified index of small-cap stocks focused on non-industry-leading companies.|
|Disadvantages: The Russell 2000 Index tends to be more volatile than large-cap indexes. However, when small caps come into favor with investors, it tends to perform very well. But the index can be stuck in the doldrums for years when small caps are languishing.|
|Investing: There are many index funds that track the Russell 2000.|
Index Investing: Other Indexes
InvestingThe S&P 500 and Russell 2000 are used as benchmarks for broader segments of the U.S. stock market. Each index has its own approach to measuring stocks.
InvestingThe Russell 2000 index represents the small cap universe, with a broad selection of fast growth companies at the bottom end of the capitalization spectrum.
InvestingWe look at the differences of investing in a S&P 500 vs. the Russell 2000 exchange-traded fund, and when to choose the one over the other.
InvestingAnalyze the recent stock performance for different types of stocks to determine which equities could gain or benefit ahead of Russell index reconstitution.
InvestingLearn about three ETFs that track the Russell Top 200 Index and how these ETFs have a very high correlation with the S&P 500 index.
InvestingRead about a triple-leveraged exchange-traded fund that aims for 300% of the returns of the Russell 2000 Index: the Direxion Small Cap Bull 3X.
InvestingLearn about the iShares Russell 1000 Value exchange-traded fund (ETF), which invests in value stocks that are included in the Russell 1000 Value index.
InvestingIn our recent article we pointed out a divergence between the small cap Russell 2000 and the S&P 500. However, the divergence has narrowed.
InvestingThe Russell 2000 small cap stock index may outperform this year after rising nearly 20% in 2016
RetirementDiscover four mutual funds administered and managed by Russell Investments that would add diversification benefits to a retirement portfolio.