Index Investing: The Russell 2000 Index
  1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion

Index Investing: The Russell 2000 Index


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

  1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion
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RELATED FAQS
  1. What are the most important equity market indexes?

    Discover the most important equity market indexes. Stock market indexes are tools to evaluate the performance of the stock ... Read Answer >>
  2. What should I use as a benchmark for my small-cap stock portfolio?

    When creating a stock portfolio, it is important to have a benchmark against which you can compare your returns. Comparing ... Read Answer >>
  3. What are some of the best small cap index funds?

    Learn about the best small-cap index funds, such as the iShares Russell 2000, IWM due to its low costs; liquidity; and diversification. Read Answer >>
  4. Which is the best index to use to study the possible future price action of a given ...

    It is a smart idea to study the movements of a broad-based index of companies before making an investment decision. Specifically, ... Read Answer >>
  5. Is there such a thing as a nano cap or micro cap index?

    While there are indexes that track micro cap stocks, there are few indexes tracking nano caps. Although definitions vary, ... Read Answer >>
  6. Is there an index for tracking mid-cap stocks?

    Learn the specifics about indexes available for tracking companies with market capitalizations in the medium-sized, small ... Read Answer >>

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