The Russell 2000 Index is a stock market index that measures the performance of approximately 2,000 small-cap companies in the United States. It is one of the most widely followed indices for small-cap stocks and is often used as a benchmark for the overall performance of small-cap equities.
The Russell 2000 Index is maintained by FTSE Russell, a leading global index provider. It is a subset of the broader Russell 3000 Index, which includes the 3,000 largest U.S. stocks by market capitalization. The Russell 2000 Index is reconstituted annually to ensure that it accurately reflects the current small-cap market.
One of the key characteristics of the Russell 2000 Index is its focus on smaller companies, which tend to have higher growth potential but also higher volatility compared to larger companies. As a result, the index is often used by investors looking to gain exposure to small-cap stocks and diversify their portfolios.
The Russell 2000 Index is market-cap weighted, meaning that companies with higher market capitalizations have a greater impact on the index’s performance. This can result in the index being skewed towards larger small-cap companies, as they have a larger influence on its value.
Overall, the Russell 2000 Index provides investors with a valuable tool for tracking the performance of small-cap stocks in the U.S. market. Whether you are looking to invest in small-cap companies or simply monitor their performance, the Russell 2000 Index is a useful benchmark to keep an eye on.