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.
InvestingFind out more about the iShares Russell 2000 exchange-traded fund, or ETF, the characteristics of this ETF and its suitability for investing.
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.
InvestingDiscover three reasons why the iShares Russell 2000 ETF has limited upside, due to inaccurate valuations and a decline in the biotech and M&A sectors.
InvestingFind out how the SPDR Dow Jones Industrial Average ETF compares with the iShares Russell Top 200 as mega-cap exchange-traded funds.
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.
InvestingThis low beta ETF tracks an offshoot of a popular index and could be a better bet than its cap-weighted rivals.
InvestingThis sophisticated approach will add flair to your returns.
InvestingThis small-cap ETF offers dividend consistency not often found with smaller stocks.