Russell 2000
What It Is
The Russell 2000 is an index tracking 2,000 small‑cap U.S. companies, representing the performance of the small‑cap segment of the equity market.
Why It Matters
It provides insight into domestic economic conditions, as small‑cap companies are more sensitive to U.S. growth trends.
How It Works
- Includes the smallest 2,000 companies in the Russell 3000
- Market‑cap weighted
- Rebalanced annually during the “Russell Reconstitution”
Key Components
- Small‑cap companies
- Broad sector representation
- Market‑cap weighting
Example
The Russell 2000 often outperforms during early economic expansions when small businesses grow rapidly.
Key Takeaways
- The index is a key measure of small‑cap performance.
- It reflects domestic economic strength more than global trends.
- It is widely used for benchmarking small‑cap funds.