Russell 2000 Index Definition and Key Metrics

As long as prices remain above the average there is strength in the market. One good example is the Vanguard Russell 2000 ETF (VTWO -1.3%), which invests in all the stocks in the index according to their relative weights. With a small (0.10%) expense ratio, the ETF’s fees are low, and its long-term performance should be virtually identical to that of the index itself. The largest company in the Russell 2000 index has a market cap of roughly $10 billion.

  1. More sophisticated investors may also trade Russell 2000 Index futures contracts.
  2. The table below highlights a breakdown of the index by industry.
  3. The S&P 500 and Dow Jones Industrial Average (DJIA) indices, on the other hand, track large-cap stocks.
  4. In turn, it will likely be placed in the Russell 1000 index, which is designed to be a barometer of how large-cap stocks are doing.
  5. The Russell 2000 is designed to provide the best indicator of how small-cap U.S. stocks are doing.

Both the S&P 500 and Russell 2000 indexes are market-cap-weighted. However, unlike the S&P 500 index, the securities in the Russell 2000 index are not selected by a committee. Instead, the holdings are determined through a formula based on their market cap and current index membership. The term Russell 2000 Index why the swiss franc is so strong refers to a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. Investing in the Russell 2000 is a great way to get exposure to the exciting world of small-cap investing without relying too heavily on the performance of any single company.

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Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. The takeaway is that while these aren’t exactly tiny enterprises, they aren’t giant companies either. That’s the key difference between the Russell 2000 and the “headline” indexes.

Understanding the Russell 2000 Index

The vast diversification of the index should help to smooth out the volatile nature of investing in smaller stocks while maintaining the potential for market-beating performance. If you want to invest in the Russell 2000 Index, you don’t need to buy all 2,000 stocks. You can invest in the index rather easily through a mutual fund or exchange-traded fund (ETF) designed to track it passively. To keep up to date on small-cap stocks, the Russell 2000 index is reconstituted annually to ensure that the companies in it are representative of the small-cap universe of stocks. In simple terms, if a company gets too large, it will be removed from the Russell 2000 index.

Key Metrics of the Russell 2000 Index

Instead, here are 10 of the largest Russell 2000 companies, just to give you an idea of the types of companies that make up the index. The smallest 1,000 companies in the Russell 2000 make up the Russell 1000 Microcap Index. The Russell 2000 is, itself, composed of the two-thousand smallest companies in the broad Russell 3000 Index. As of Oct. 31, 2023, the index’s top three holdings were Super Micro Computer (SMCI), Matador Resources (MTDR), and Chord Energy (CHRD). It is highest weighted in healthcare, followed by industrials and financials. The table below highlights a breakdown of the index by industry.

The smaller ones have market caps in the $200 million range. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Barchart Plus Members have 10 downloads per day, while Barchart Premier Members may download up to 100 .csv files per day. Also unique to Barchart, this feature allows you to scroll through all the symbols on the table in a chart view. At the top, you’ll find a histogram containing today’s high and low price. The histogram shows where the open and last price fall within that range.

It is a U.S. index and is managed by FTSE Russell, which is a subsidiary of the London Stock Exchange (LSE) Group. The Russell 2000 is designed to provide the best indicator of how small-cap U.S. stocks are doing. With that in mind, here’s a rundown of what investors should know about the Russell 2000 Index, how it works, and whether it could be a smart investment choice. Pages are initially sorted in a specific order (depending on the data presented). You can re-sort the page by clicking on any of the column headings in the table.

For dynamically-generated tables (such as a Stock or ETF Screener) where you see more than 1000 rows of data, the download will be limited to only the first 1000 records on the table. For other static pages (such as the Russell 3000 Components list) all rows will be downloaded. This is to be expected since the average includes data from the previous, lower priced days.

The “More Data” widgets are also available from the Links column of the right side of the data table. The Russell 2000 is an index that tracks two thousand small-cap companies, while the S&P 500 tracks five hundred large-cap companies. Therefore, the two differ in both the number of stocks in the index and the sizes of those companies. Because of this, there is not much overlap, if any, between the stocks held in each index. Ordinary investors can invest in the Russell 2000 via index ETFs that track it, such as the BlackRock iShares Russell 2000 ETF (IWM) or Vanguard’s Russell 2000 ETF (VTWO). More sophisticated investors may also trade Russell 2000 Index futures contracts.

The Russell 2000 Value Index tracks the performance of companies with lower price-to-book ratios, which shows a company’s market price relative to its balance sheet. The Russell 2000 Growth Index is a subset of companies with higher price-to-value ratios, or those expected to have higher growth values in the future. The Russell 2000 Index is market cap-weighted, adjusted by each company’s number of shares outstanding. This means that a member stock’s last sale price as well as the number of shares that can actually be traded (rather than the company’s entire market cap) influence the index. The Russell 2000 announces changes to the small-cap index between May and June of each year. Because it is closely followed by mutual funds managers and individual investors, speculation as to which companies will be added can cause a jolt in short-term demand.

It’s no surprise that many mutual funds and exchange-traded funds (ETFs) are tied to or based on the Russell 2000. The index is the most widely quoted measure of the overall performance of small-cap to mid-cap stocks. It represents approximately 7% of the total Russell 3000 market capitalization. It is made up of the bottom two-thirds in terms of company size of the Russell 3000 index. The larger index reflects the movements of nearly 96% of all publicly traded U.S. stocks. The index’s returns can be replicated by investors who take the trouble to create a sizeable and complex portfolio that mirrors the index.

A stock market index shows how investors feel an economy is faring. An index collects data from a variety of companies across industries. Together, that data forms a picture that helps investors compare current price levels with past prices to calculate market performance. While the Dow Jones Industrial Average and the S&P 500 get most of the headline attention, it’s important for investors to understand that there are many different stock indexes. One of the most popular stock indexes that doesn’t track large companies is the Russell 2000, widely considered the benchmark for smaller U.S. stocks. The Russell 2000 Index, sometimes abbreviated as “Russell 2K,” is the most widely used index of small-cap stocks — stocks with a relatively small market capitalization.