Russell 2000 Index Funds Overview and Investment Analysis

The Russell 2000 Index Funds are a type of investment that tracks the performance of the smallest 2,000 publicly traded companies in the US.

These funds are designed to provide broad diversification and are often used by investors seeking to gain exposure to small-cap stocks.

The Russell 2000 index is a market-capitalization-weighted index, which means that the largest companies in the index have a greater influence on the overall performance of the fund.

Investing in Russell 2000 Index Funds can be a great way to add some excitement to your portfolio, as small-cap stocks have the potential to offer higher returns than larger companies.

The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It's a widely regarded bellwether of the U.S. economy due to its focus on smaller companies in the U.S. market.

The index was launched in 1984 by the Frank Russell Company and is managed by FTSE Russell, a subsidiary of the London Stock Exchange (LSE) Group. It's a U.S. index composed of about 2,000 small-cap companies.

The Russell 2000 Index represents approximately 7% of the total Russell 3000 market capitalization and is made up of the bottom two-thirds in terms of company size of the Russell 3000 index. This means it's a comprehensive measure of the performance of small-cap to mid-cap stocks.

Here's a breakdown of the index by industry, highlighting its top sectors:

Mutual fund investors favor the Russell 2000 Index because it reflects the investment opportunity presented by the entire market, rather than opportunities offered by narrower indices.

The Russell 2000 index is made up of 2,000 small-cap companies.

The average value for a company on the Russell 2000 was $4.82 billion as of March 31, 2024, while the median market cap was $960 million.

The Russell 2000 has two sub-indexes: the Russell 2000 Growth Index and the Russell 2000 Value Index, which track the performance of companies with higher and lower price-to-book ratios, respectively.

Here's a summary of the Russell 2000's performance over the years:

The Russell 2000's average annual total return over the past 10 years was 7.80%, with a cumulative return of 111.88% as of December 31, 2024.

The Russell 2000 index is made up of 2,000 small-cap companies, with an average market value of $4.82 billion and a median market cap of $960 million as of March 31, 2024.

The Russell 2000 is a broad index that tracks the performance of small-cap stocks, giving it an edge over narrower indexes of small-cap stocks.

Here are some key metrics of the Russell 2000 index:

The Russell 2000 has a sub-index called the Russell 2000 Growth Index, which measures the performance of Russell 2000 companies with higher price-to-value ratios and higher forecasted growth values.

The Russell 2000 has a sub-index called the Russell 2000 Value Index, which measures the performance of Russell 2000 companies with lower price-to-book (P/B) ratios and lower forecasted growth values.

The Russell 2000 is itself composed of the two-thousand smallest companies in the broader Russell 3000 Index.

The Russell 2000 index has shown a total return of 11.14% for the year ending December 31, 2024. This is a significant performance, especially considering the broader market trends.

The index has also demonstrated a strong long-term track record, with a total return of 106.67% over the past 10 years. This is a testament to the resilience and growth potential of small-cap companies.

The Russell 2000 index has consistently outperformed its benchmark, with a total return of 11.14% compared to the benchmark's 11.54% for the year ending December 31, 2024. This suggests that the index has been a reliable choice for investors seeking to tap into the growth potential of small-cap stocks.

Here's a breakdown of the index's performance over the past 5 years:

The Russell 2000 index has shown a mixed performance over the past few years, with periods of strong growth followed by significant declines. However, the index has consistently recovered from these downturns and continued to grow over the long term.

The index's performance has also been compared to its Morningstar category average, with the Russell 2000 index lagging behind in some years. For example, in 2022, the index returned -20.57%, while the Morningstar category average returned -16.24%. However, in 2024, the index returned 11.14%, while the Morningstar category average returned 11.15%.

Fees and expenses are an essential consideration when investing in Russell 2000 index funds. The total expense ratio (TER) of these funds can range from 0.25% to 0.35% per annum.

Some Russell 2000 ETFs have a lower TER than others. For example, the Invesco Russell 2000 UCITS ETF Acc has a TER of 0.25% p.a., while the Amundi Russell 2000 UCITS ETF USD has a TER of 0.35% p.a.

Here's a comparison of the TERs of some Russell 2000 ETFs:

The premium/discount is the difference between the fund's net asset value (NAV) and its market price. It's a key metric to consider when evaluating fees and expenses.

In the given data, the premium/discount is calculated as a percentage of the fund's NAV. For example, on September 30, 2024, the premium/discount for the 1-year period was 26.60% for total return and 26.55% for market price.

Here's a breakdown of the premium/discount for different time periods:

As you can see, the premium/discount varies significantly depending on the time period. For instance, the 1-year period has a much higher premium/discount than the 10-year period. This suggests that the fund's NAV and market price have been more volatile in the short term.

It's essential to consider the premium/discount when evaluating fees and expenses, as it can impact your investment returns.

Fees can be a significant consideration when investing in an ETF. The management fee for some ETFs can be as high as 0.38% as seen in Example 3.

The gross expense ratio of an ETF is the total cost of running the fund, including management fees, administrative costs, and other expenses. For instance, the gross expense ratio for the Invesco Russell 2000 UCITS ETF Acc is 0.25% p.a. as shown in Example 4.

The net expense ratio is the actual cost of investing in an ETF after deducting any waivers or reimbursements. The net expense ratio for the L&G Russell 2000 US Small Cap Quality UCITS ETF is 0.12% as mentioned in Example 2.

ETFs often have various fees and expenses, such as acquired fund fees and expenses, interest expense, and other expenses. In Example 2, we see that the acquired fund fees and expenses for the L&G Russell 2000 US Small Cap Quality UCITS ETF are 0.00%.

Here's a breakdown of the fees and expenses for some ETFs:

Note: The net expense ratio for the Invesco Russell 2000 UCITS ETF Acc is not provided in the example.

ETF comparison is a crucial step in selecting the right Russell 2000 index fund for your investment needs. The total expense ratio (TER) is a key factor to consider, with the Invesco Russell 2000 UCITS ETF Acc boasting the lowest TER at 0.25% p.a.

You can also compare Russell 2000 ETFs based on their size, cost, age, use of profits, fund domicile, and replication method. The SPDR Russell 2000 US Small Cap UCITS ETF, for example, has a fund size of 4,741 million EUR and a TER of 0.30% p.a.

To get a comprehensive view of the ETFs' performance, you can also compare their returns. The table below shows the returns of all Russell 2000 ETFs in comparison, including the 1-month, 3-month, 6-month, 1-year, and 3-year returns.

By considering these factors and comparing the performance of different ETFs, you can make an informed decision and choose the best Russell 2000 index fund for your investment goals.

The Russell 2000 index funds are a great way to invest in small-cap stocks, and understanding their holdings is key to making informed investment decisions.

PENN NATIONAL GAMING INC is one of the top holdings in the Russell 2000 index funds, making up 0.58% of the portfolio.

SUNRUN INC is another significant holding, accounting for 0.48% of the portfolio.

CAESARS ENTERTAINMENT INC, MYOKARDIA INC, and NOVAVAX INC are also notable holdings, with weights of 0.41%, 0.37%, and 0.35% respectively.

Here are some of the top holdings in the Russell 2000 index funds, ranked by their weight in the portfolio:

These holdings provide a snapshot of the types of companies that make up the Russell 2000 index funds, and can help you make more informed investment decisions.

The Russell 2000 Index is unique in its weighting method, which combines market cap and other indexes a stock is listed on. This means that a stock's last sale price, number of shares that can be traded, and whether it's on other indexes all play a role in its listing on the index.

The Russell 2000 tracks small-cap stocks, a big difference from the S&P 500 and Dow Jones Industrial Average, which track large-cap stocks. This distinction is key to understanding the index's performance.

Investors who want to replicate the index's returns can create a complex portfolio, but there are easier ways to get the same results. For instance, index futures, index-based mutual funds, or ETFs can be used to track the Russell 2000.

The iShares Russell 2000 index ETF (IWM) is the most heavily traded of the ETFs, making it a popular option for investors.