Russell 2000 Index
Historical returns and performance of the U.S. small-cap benchmark
What is the Russell 2000?
The Russell 2000 is a stock market index that tracks the performance of 2,000 small-cap U.S. companies. It is a subset of the Russell 3000 Index and represents approximately 7% of the total U.S. equity market capitalization.
Small-cap stocks (typically companies with market caps between $300 million and $2 billion) are often younger companies with higher growth potential but also higher risk compared to large-cap stocks.
On StocksBio, we use IWM (iShares Russell 2000 ETF) as our Russell 2000 benchmark. IWM is the most popular small-cap ETF with an expense ratio of 0.19%.
Russell 2000 Historical Returns
Based on IWM ETF data. $1,000 invested at the start of each period.
Russell 2000 CAGR (Compound Annual Growth Rate)
Small-cap stocks have historically provided higher long-term returns than large-caps, but with significantly more volatility. The Russell 2000 often outperforms during economic recoveries and underperforms during recessions.
Russell 2000 Monthly Statistics
Understanding the Russell 2000
Why Invest in Small-Cap Stocks?
Small-cap stocks offer several potential advantages:
- Growth potential: Smaller companies have more room to grow
- Diversification: Different risk/return profile from large-caps
- Undervalued opportunities: Less analyst coverage may create mispricings
- Economic sensitivity: Often first to benefit from economic recovery
Russell 2000 vs S&P 500
Key differences between these indices:
- Company size: Small-cap (Russell 2000) vs large-cap (S&P 500)
- Number of stocks: 2,000 vs 500
- Volatility: Higher for Russell 2000
- Sector mix: More financials and industrials in Russell 2000
Annual Reconstitution
The Russell 2000 is reconstituted annually in June. Companies that have grown too large move to the Russell 1000 (large-cap), while smaller companies are added. This "graduation effect" means successful companies leave the index.