Russell 2000 Index

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Russell 2000 Index

What it is

The Russell 2000 Index tracks the performance of roughly 2,000 small-cap U.S. companies. Created to represent the small-cap segment of the broader Russell 3000 Index, it is widely used as the benchmark for U.S. small-cap stocks and by mutual fund and ETF managers to measure relative performance.

How it’s constructed

  • Managed by FTSE Russell.
  • Constituents are the 2,000 smallest companies by market capitalization within the Russell 3000.
  • Weighting method: float-adjusted market capitalization (shares available to public investors).
  • Reconstitution and rebalancing: performed annually each June to ensure the index reflects current small-cap market composition.

Key metrics and characteristics

  • Represents the small-cap portion of the Russell 3000 and accounts for a modest share of the Russell 3000’s total market cap.
  • Typical company size (example data point): average market cap about $4.82 billion; median market cap about $960 million; largest constituent around $58.4 billion.
  • Sector weightings tend to be concentrated in industrials, healthcare, and financials.
  • First exceeded the 1,000 level in May 2013.
  • All-time high: 2,458 (November 7, 2021).

Sub-indexes and related indexes

  • Russell 2000 Growth Index: tracks Russell 2000 companies with higher growth characteristics (higher price-to-earnings or price-to-value measures and higher forecasted growth).
  • Russell 2000 Value Index: tracks Russell 2000 companies with value characteristics (lower price-to-book ratios and lower forecasted growth expectations).
  • The Russell 1000 Microcap Index covers the smallest portion of the Russell 2000 roster (the smallest 1,000 companies within the Russell 2000).

Why investors use it

  • Benchmark for small-cap mutual funds and ETFs — offers a broad, diversified view of the U.S. small-cap market.
  • Used to evaluate fund manager performance and to construct passive small-cap investment products.
  • Easy exposure via index-based mutual funds, ETFs (for example, iShares Russell 2000 ETF — ticker IWM), and futures.

Example holdings (snapshot)

As an illustrative snapshot, top holdings have included companies such as Super Micro Computer, MicroStrategy, and Comfort Systems USA, reflecting the index’s focus on smaller-cap, high-growth, and sector-diverse constituents (sector weights led by industrials, healthcare, and financials).

What it indicates

The Russell 2000 serves as a barometer of the U.S. small-cap market and, by extension, a useful gauge of economic and market sentiment toward smaller, domestically focused companies. Because small caps are often more sensitive to domestic economic trends and financing conditions, movements in the Russell 2000 can provide signals about risk appetite and economic momentum.

Bottom line

The Russell 2000 is the primary benchmark for U.S. small-cap equities. It offers broad, float-adjusted market-cap exposure to roughly the smallest two-thirds of the Russell 3000 and is reconstituted annually to maintain a current representation of the small-cap market. Investors seeking diversified small-cap exposure commonly use ETFs and index funds that track the Russell 2000 or its growth/value splits.