Russell 2000 Index
Russell 2000 Index Definition
The Russell 2000 is a market-cap weighted index that bases its weighting on shares outstanding.
Frank Russell started the Index in 1984.
It primarily focuses its attention on 2,000 of the US’s small-cap companies and is the standard for any investor looking to invest in small-cap companies.
Defining Russell 2000 Index in Simple Terms
The Russell 2000 Index is made up of the smallest 2000 companies in the Russell 3000 Index, which tracks about 98% of the U.S.’s publicly traded stock.
Similar to the Russell 2000
The Russell 2000 shares a lot of similarities with the S&P 500.
Both are market-weighted indexes, and base their weighting on outstanding shares.
In fact, it could be said that the Russell 2000 is to small-cap investors what the S&P 500 is for large-cap investors.
The Purpose of the Russell 2000
In other words, it is the most popular and widely looked to authority on the status of America’s small-cap companies.
As a result, the Russell 2000 is often looked to as an indicator of the American economy’s health.
Given that typically, small, domestic-focused businesses are hit first and hardest in times of economic downturn.
What Is the Russell 2000 Index FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.