The Russell 2000 Index is a popular Russell US Index (there are 14 in all). It measures the performance of about 2,000 small-cap companies (generally those with a market cap between $300 million and $2 billion) that are in the bottom two-thirds of the Russell 3000 Index – which is made up of 3,000 of the biggest U.S.-traded stocks (all Russell US Indexes are subsets of the Russell 3000).
The Russell US Indexes are the leading U.S. equity benchmarks for institutional investors, and the Russell 2000 is the most common benchmark for small-cap portfolios.
While the Index covers a range of sectors, its top five sectors are financial services, health care, durables, technology and consumer discretionary.
Snapshot
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Created By: |
Created by the Frank Russell Company in 1984. Today it is maintained by FTSE Russell, a trading name of FTSE International Limited (“FTSE”) and Frank Russell Company. |
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Number of Companies: |
2,000 U.S. companies. |
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Types of Companies: |
Small cap companies from various industries with a closing price of at least $1.00 on rank day in May. Bulletin boards, pink sheets and over-the-counter traded securities are not eligible. |
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Selection Criteria: |
This index consists of the smallest 2,000 companies in the Russell 3000 Index. Changes are made on an as-needed basis and during annual reconstitution, which takes place in June each year (the securities are ranked in May). |
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How it's Calculated: |
The Russell 2000 is a capitalization-weighted Index. |
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Advantages: A well-diversified index of small-cap stocks focused on non-industry-leading companies. |
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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. |
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Investing: You can invest in the Russell 2000 Index through index futures (the e-mini Russell 2000, ticker symbol RTY), mutual funds and ETFs such as the iShares Russell 2000 Index ETF (IWM). |
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