Understanding the Russell 2000 Stock Market Index

The Russell 2000 stock market index is a benchmark for small-cap stocks in the US. It's calculated by Russell Investments, a global investment manager.

The Russell 2000 index is a subset of the Russell 3000 index, which tracks the 3,000 largest US public companies. This means that the Russell 2000 index only includes the smallest 2,000 companies.

The Russell 2000 index is widely followed by investors and is used as a benchmark for small-cap stock performance.

The Russell 2000 is a market index that tracks the performance of small-cap stocks. It's made up of 2,000 of the smallest companies in the Russell 3000 Index.

The Russell 2000 is a market cap-weighted index, which means that larger companies have a greater impact on its performance. The largest company in the index has a market cap of roughly $13 billion.

The index is a key benchmark for small-cap stocks, and it's widely used by active investors to compare their performance. The average market cap of companies in the index is roughly $3 billion.

The Russell 2000 Index is a market-capitalization weighted index that tracks the performance of 2,000 publicly traded small-cap U.S. companies.

The index is divided into two smaller ones: the Russell 1000, which accounts for the 1,000 largest companies, and the Russell 2000, which accounts for the remaining two-thirds.

The Russell 2000 is part of the larger Russell 3000 Index, which comprises all publicly traded U.S. companies.

The largest company in the Russell 2000 has a market cap of roughly $13 billion, and the average market cap of companies in the index is roughly $3 billion.

Here are some key facts about the Russell 2000 Index:

The Russell 2000 is widely used by active investors in the small-cap space for benchmarking their performance.

The Russell 2000 Index is renowned for its diverse array of small-cap companies, each contributing uniquely to its overall performance. Some stand out due to their significant market capitalization, reflecting their substantial influence and growth potential within the small-cap sector.

These companies are the key players driving the index's performance, and understanding which ones hold the largest market caps can provide valuable insights into the small-cap market. The top 10 largest stocks by market cap within the Russell 2000 as of July 19 are highlighted in the list below.

The top stocks within the Russell 2000 Index provide valuable insights into the overall health and trends of the stock market, particularly within the small-cap sector.

The Russell 2000 Index is designed to provide the best indicator of the performance of small-cap U.S. stocks, with a goal of keeping up to date on these stocks through annual reconstitution.

It's reconstituted annually to ensure the companies in it represent the small-cap universe, with companies that grow too large being removed and likely placed in the Russell 1000 Index, which tracks large-cap stocks.

The index is made up of about 2,000 small-cap companies, representing approximately 7% of the total Russell 3000 market capitalization.

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The Russell 2000 is composed of the bottom two-thirds in terms of company size of the Russell 3000 index, with the larger index reflecting the movements of nearly 96% of all publicly traded U.S. stocks.

FTSE Russell ranks companies by their market cap, and the bottom 2,000 make up the Russell 2000 Index, while the top 1,000 companies make up the Russell 1000.

The index is a market-capitalization weighted index, with the amount each company accounts for in the index determined by the size of the company's market cap.

The index is widely used by active investors in the small-cap space for benchmarking their performance, with investors comparing the performance of small-cap mutual funds to the Russell 2000.

Here's a breakdown of the index by industry:

You can invest in the Russell 2000 by purchasing shares of exchange-traded funds (ETFs) or mutual funds that track the index, providing broad exposure to the small-cap sector. Popular options include the iShares Russell 2000 ETF (IWM) and the Vanguard Russell 2000 ETF (VTWO).

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The Russell 2000 Index is a U.S. index managed by FTSE Russell, a subsidiary of the London Stock Exchange (LSE) Group, and it's composed of about 2,000 small-cap companies. It represents approximately 7% of the total Russell 3000 market capitalization.

The index is designed to track the performance of the 2,000 smallest companies in the Russell 3000 Index, providing a benchmark for the U.S. small-cap sector. It's widely used to gauge the health and performance of smaller, often growth-oriented businesses within the broader market.

The Russell 2000 Index is highest weighted in industrials, followed by healthcare, then financials. Here's a breakdown of the index by industry:

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 a market index composed of 2,000 small-cap companies.

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

The largest stock by market cap on the index was $58.43 billion.

The Russell 2000 first traded above 1,000 on May 20, 2013.

The index has two sub-indexes: the Russell 2000 Growth Index and the Russell 2000 Value Index.

The Russell 2000 Growth Index measures the performance of Russell 2000 companies with higher price-to-value ratios and higher forecasted growth values.

The Russell 2000 Value Index measures the performance of Russell 2000 companies with lower price-to-book (P/B) ratios and lower forecasted growth values.

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 broader Russell 3000 Index.

Investors can replicate the returns of the Russell 2000 Index by investing in a fund that tracks the index.

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The Russell 2000 stock code includes a diverse range of companies, each with its own unique characteristics.

The median market cap of a company in the Russell 2000 was about $950 million at the end of 2022, which is significantly lower than the broader Russell 3000 Index.

Some of the companies in the Russell 2000 include Halozyme Therapeutics (HALO), Shockwave Medical (SWAV), and Inspire Medical Systems (INSP).

Here are a few more examples of companies in the Russell 2000:

These companies are spread across various sectors, including healthcare, industrial, consumer discretionary, and more.

The Russell 2000 includes a mix of sectors that offers a more nuanced view of smaller businesses, unlike larger indices that may be heavily weighted towards technology giants or financial behemoths.

The Russell 2000 is distinct from other major stock indices due to its focus on small-cap companies. The Russell 2000 Index is more sensitive to domestic economic changes and can offer higher growth potential, albeit with higher risk.

The Russell 2000 has a median market cap of $966 million, significantly lower than the S&P 500's focus on large-cap stocks. This smaller market cap contributes to the Russell 2000's higher volatility.

The Russell 2000 is more diversified than other popular indexes, containing 2,000 stocks compared to the S&P 500's 500. This diversification helps mitigate risk since the Russell 2000 is less reliant on any particular stock's performance.

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The Russell 2000 is distinct from other major stock indices, particularly in its focus on small-cap companies. Unlike the S&P 500, which tracks the performance of large-cap stocks, the Russell 2000 provides a snapshot of the performance and health of smaller, often more volatile, companies.

The Russell 2000 includes 2,000 publicly traded small-cap U.S. companies, with a median market cap of $966 million as of Aug. 31, 2024. This is significantly smaller than the median market cap of a company in the S&P 500.

The index is more diversified than other popular indexes, such as the S&P 500, due to its focus on smaller companies and the large number of companies included in the index. This helps mitigate risk since it's less reliant on any particular stock's performance.

Here are the key differences between the Russell 2000 and other major stock indices:

The Russell 2000 is more sensitive to domestic economic changes and can offer higher growth potential, albeit with higher risk, compared to large-cap indices. This is due to the inclusion of smaller, often more volatile, companies in the index.

The Nasdaq Composite and the S&P 500 are two popular stock-market indexes. The Nasdaq Composite index includes all the companies that trade on the Nasdaq exchange, which is known for its many technology companies and internet-related businesses.

The S&P 500, on the other hand, tracks about 500 businesses. This is a significant difference in size compared to the Nasdaq Composite index, which has no specified number of companies.

The S&P 500 and the Dow Jones Industrial Average are often used to measure the performance of large and profitable companies. The Nasdaq Composite index, however, is often used to measure the performance of technology-related shares.

The S&P 500 and the Dow Jones Industrial Average are both well-established indexes that track a specific segment of the US stock market.

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The Russell 2000 Index is a U.S. index that tracks small-cap stocks, with about 2,000 companies making up the index. It was launched in 1984 by the Frank Russell Company and is now managed by FTSE Russell.

Investing in the Russell 2000 Index can be done through mutual funds or ETFs, with popular options including the iShares Russell 2000 ETF (IWM) and the Vanguard Russell 2000 ETF (VTWO). These funds offer broad exposure to the small-cap sector and typically come with low fees.

One of the key benefits of investing in the Russell 2000 Index is its diversification, with the index composed of the bottom two-thirds in terms of company size of the Russell 3000 index. This means that investors can gain exposure to a wide range of small-cap stocks with a single investment.

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The Russell 2000's valuation is a topic of interest, with some investors wondering if it's overvalued. The price-earnings multiple is a popular measure to evaluate the index's valuation, and as of January 2023, it stood at around 23, according to Birinyi Associates.

This multiple is based on earnings estimates for the next 12 months, which may not reflect the actual earnings. The Russell 2000's price-earnings multiple is significantly higher than what it was in the past, which may indicate that the index is overvalued.

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The index performed extremely well following the initial pandemic concerns, but it fell by more than 20 percent in 2022 due to rising interest rates and recession worries. This significant drop may have created a buying opportunity for investors.

The past year has seen the index fall by 7 percent as of January 25, 2023, which may indicate that the market is correcting itself. The Russell 2000's valuation will continue to be a topic of interest as investors monitor its performance.

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The Russell 2000 Index is weighted using a combination of market cap and the other indexes a stock is listed on, making its listing dependent on a stock's last sale price, the number of shares that can be traded, and whether it is on other indexes.

The Russell 2000 tracks small-cap stocks, unlike the S&P 500 and Dow Jones Industrial Average (DJIA) indices, which track large-cap stocks.

Investors can replicate the index's returns by creating a complex portfolio, but there are easier ways to get the same returns. Index futures, index-based mutual funds, and ETFs are popular options.

The iShares Russell 2000 index ETF (IWM) is the most heavily traded ETF, offering diversification within the small-cap universe for an annual fee of 0.19 percent.

The Vanguard Russell 2000 ETF (VTWO) is another option that tracks the index, coming with an expense ratio of just 0.10 percent.